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5-/S 




San Francisco Public Library 

Government Information Center 
San Francisco Public Library 
100 Larkin Street, 5th Floor 
San Francisco, CA 94102 

REFERENCE BOOK 

Not to be taken from the Library 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/3minutes2002sanf 




City and County of San Francisco Cit y Hal1 

J J 1 Dr. Carlton B 

Meeting Minutes coodiett piace 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: Gail Johnson 

Wednesday, March 06, 2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Sophie Maxwell. 



MEETING CONVENED 

The meeting convened at 12:39 p.m. 

011994 (Reserved Funds, Fire Department] 

Hearing to request release of reserved funds, Fire Department (Fiscal Year 2001-02), in the total amount of 
$4,389,086 for the following: Treasure Island Lease Payment-$ 1,764, 000; Chiefs Aide's Salaries/Fringes- 
$1,000,286; and Overtimed 1,624,800. (Fire Department) 
1 1/29/01, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Mario Trevino, Chief, Fire Department. 
Release of reserved funds in the amount of $2, 764,286 approved (SI, 764,000 for Treasure Island Lease 
Payment and $1,000,286 for Chiefs Aide's Salaries/Fringes). 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020147 [Lease of SFPUC Property for Hotel Parking and Recreation Purposes] 

Resolution authorizing a Ten (10) Year Lease of Public Utilities Commission Land between the City and 
County of San Francisco and Los Altos Hotel Associates, in Santa Clara County. (Public Utilities Commission) 
2/13/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst: Garrett Dowd, Director, Bureau of 
Commercial Land Management, Public Utilities Commission. 
RECOMMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 1 Prinn-d at 6:04 PM ,.;. 3 2 04 



Finance Committee 



Meeting Minutes 



March 6, 2002 



0203 1 7 [ Reserved Funds, Department of Public Health] 
Supervisor Hall 

Hearing to request release of reserved funds, Department of Public Health (File 01 1096, Resolution No. 576- 
01), in the amount of 560,000 to fund the department's substance abuse treatment programs. (Public Health 
Department) 

2/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst: Alice Gleghorn, Director of Research, 
Community Health Substance Abuse, Department of Public Health, 
Release of reserved funds in the amount of $60,000 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



011216 |Long-term Power Contract with Calpine Energy] 
Supervisors Peskin, Daly 

Hearing to examine the long-term contract entered into by the City and County of San Francisco and Calpine 

Energy on May 7, 2001. 

6/25/01, RECEIVED AND ASSIGNED to Audit, Labor and Government Efficiency Committee. 

10/9/01, CONTINUED. Continued to October 23, 2001 . 

10/23/01, CONTINUED. Continued to November 13, 2001 . 

1 1/13/01 , CONTINUED TO CALL OF THE CHAIR. Heard in Committee. Speakers: Supervisor Peskin; Ed Smelloff, Public Utilities 

Commission (PUC); Supervisor Newsom; Laune Park, General Manager, Hetch Hetchy; Supervisor McGoldrick; Supervisor Daly. 

1/28/02, TRANSFERRED to Public Works and Public Protection Committee, new committee structure, 2/1/02. 

2/11/02, TRANSFERRED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers: John Jenkel; John Bardis. 

Continued to 3/6/02. 

Heard in Committee. Speakers: Edward Smeloff, Assistant General Manager, Power Policy, Public Utilities 
Commission; John Jenkel; Theodore Lakey, Deputy City Attorney. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020086 [Legislative Analyst and Budget Analyst; Budget Consideration] 
Supervisor Ammiano 

Motion directing the Office of the Legislative Analyst to pursue training from the City Controller and the Board 
of Supervisors Budget Analyst in how the City budget and budget process work; to coordinate with the Budget 
Analyst to review recent audits published by the Budget Analyst and the Controller to identify cost-saving 
measures identified in audits and other reports that have not been implemented; to provide staff support to 
policy and fiscal committees of the Board of Supervisors during hearings on budget-related matters; to 
prioritize such work over Board-approved motions or individual requests received by the Office until the FY 
02-03 budget is approved by the Board of Supervisors and directing the Board of Supervisors Budget Analyst 
to coordinate with the Office of the Legislative Analyst on budget-related work and setting forth a consent 
calendar procedure for Board Committees such that the Budget Analyst's reports on consent matters can be 
substantially reduced in order to provide additional Budget Analyst staff time to budget-related matters. 
1/14/02, RECEIVED AND ASSIGNED to Rules Committee. 

1/28/02, TRANSFERRED to Finance Committee. Transferred pursuant to new committee structure. 
3/4/02, SUBSTITUTED. Supervisor Ammiano submitted a substitute motion bearing new title. 
3/4/02, ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Supervisor Ammiano; Theodore Lakey, Deputy City Attorney; John Jenkel; 

Josh Kaufman. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 



City and County of San Francisco 



Printed at 6:04 PM on 3/2/04 



3 1223 06446 9852 



Finance Committee Meeting Minutes March 6, 2002 

Motion directing the Office of the Legislative Analyst to pursue training from the City Controller and the Board 
of Supervisors Budget Analyst in how the City budget and budget process work; to coordinate with the Budget 
Analyst to review recent audits published by the Budget Analyst and the Controller to identify cost-saving 
measures identified in audits and other reports that have not been implemented; to provide staff support to 
policy and fiscal committees of the Board of Supervisors during hearings on budget-related matters; to 
prioritize such work over Board-approved motions or individual requests received by the Office until the FY 
02-03 budget is approved by the Board of Supervisors and directing the Board of Supervisors Budget Analyst 
to coordinate with the Office of the Legislative Analyst on budget- related work; to continue to review the 
Mayor's balanced budget proposal in the month of June; to create a consent calendar procedure for Board 
Committees such that the Budget Analyst's reports on consent matters can be substantially reduced in order to 
provide additional Budget Analyst staff time to budget-related matters; and to explore other changes to its 
annual budget review designed to enhance the Board's budget review process. 
RECOMMENDED AS AMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020176 [Formulation of Department Budget] 
Supervisor Peskin 

Hearing to address the formulation of Departmental budgets for three finance related departments. 

1/28/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Susan Leal, Treasurer; Edward Harrington, Controller; John Scott, Assistant 

Assessor-Recorder; Greg Diaz, Chief Deputy Assessor-Recorder. 

FILED by the following vote: 

Ayes: 3 - Peskin, Daly, Maxwell 



ADJOURNMENT 



The meeting adjourned at 3:10 p.m. 



City and County of San Francisco 3 Printed at t>:0J I'M on } 2 04 



[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 




CITY AND COUNTY \=^^^H..S OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 

February 28, 2002 
TO: ^Finance Committee 

FROM: Budget Analyst DOCUMENTS DEP1 

SUBJECT: March 6, 2002 Finance Committee Meeting ^R . 5 2032 

Item 1 - File 01-1994 SAN FRANCISCO 

Department: Fire 



PUBLIC LIBRARY 



Item: Hearing to consider the release of reserved funds for the Fire 

Department in the amount of $4,389,086 to fund (a) the Fire 
Departments Rental Payment to Treasure Island for the Fire 
Department's use of training facilities at Treasure Island, (b) 
Chiefs Operators' Salaries and Related Mandatory Fringe 
Benefits, and (c) Overtime expenditures. 

Amount: $4,389,086 

Source of Funds: Reserved General Fund monies m the Fire Department's FY 
2001-2002 budget 

Description: The Board of Supervisors placed on reserve $4,389,086 in the 

Fire Department's FY 2001-2002 General Fund budget as 
follows: 

Item Amount 

Overtime $1,624,800 

10 H10 Chiefs Operator Positions 1,000,286 
Rental Payment for Fire Department 

Training at Treasure Island 1.764.000 

Total $4,389,086 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Reserve for Treasure Island Lease Rental Payment for 
Fire Department Training - SI. 764.000 

The Fire Department currently subleases training facilities at 
Treasure Island. The Finance Committee recommended and the 
full Board of Supervisors approved a reserve of $1,764,000 in the 
Fire Department's FY 2001-2002 budget for the annual rental 
payment to Treasure Island for training facilities used by the 
Fire Department, at Treasure Island. The Finance Committee 
raised questions concerning the potential for establishing one 
consolidated fare training facility for the Fire Department at 
Treasure Island. 

The Budget Analyst's recent Management Audit Report of the 
Fire Department, issued on January 22, 2002, notes that the 
Treasure Island facility is a possible site, for a consolidated 
training facility (see Comment No. 2). The Budget Analyst 
recommended that this issue be examined in greater detail as 
part of a recommended cost benefit assessment of alternatives 
for centralized training to be performed by the Fire Department. 

Reserve for 10 H10 Chiefs Operator Positions - $1.000.286 

The Fire Department's FY 2001-2002 budget includes 50 exempt 
H10 Chiefs Operators. The Finance Committee recommended 
and the full Board of Supervisors approved a reserve of 
$1,000,286 in the Fire Department's FY 2002-2002 budget on 
the Salaries and Mandatory Fringe Benefits of 10 H10 Chiefs 
Operator positions. The Budget Analyst did not recommend the 
deletion of any Chiefs Operators positions in the Fire 
Department Management Audit. However, the Management 
Audit recommended that the Chief of the Fire Department 
consider reductions in the suppression command staff as he 
completes a strategic plan of reorganization of the Fire 
Department. 

Reserve for Fire Department Overtime - $1.624.800 

The Budget Analyst recommended a reserve of $1,624,800 be 
placed on Fire Department Overtime in the Department's FY 
2001-2002 budget. This recommendation was accepted by the 
Finance Committee and the full Board of Supervisors. The 
amount of Overtime reserved represented 80 percent of the 
Board of Supervisors 
Budget Analyst 
2 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Department's Overtime budget increase for FY 2001-2002 of 
$2,000,000 for Suppression, resulting in a reserve of $1,600,000 
plus Mandatory Fringe Benefits of $24,800 for Social Security- 
Medicare Taxes. Prior to release of the subject reserve, the Fire 
Department was instructed by the Finance Committee to submit 
a report to the Board of Supervisors as to the steps taken by the 
Department to maintain the fully funded minimum daily 
staffing requirement of 354 firefighters with permanent 
positions for suppression and Emergency Medical Services 
which would alleviate the need for some of the Department's 
Overtime expenditures. The Fire Department has not submitted 
such a report as of the writing of this report (see Comment No. 
4). 

The table below is a projection of the Fire Department's 
Overtime expenditures and total expenditures for Salaries and 
Mandatory Fringe Benefits expenditures (including Overtime) 
for the remainder of Fiscal Year 2001-2002 provided by the 
Controller's Office. This is a straight line projection based on 
expenditures to date against all funds appropriated for Salaries 
and Mandatory Fringe Benefits, including the reserved funds on 
Overtime and on the Chiefs Operator positions. 



Controller's Projection of Fire Department General Fund Expenditures for 

Overtime and total Salaries and Mandatory Fringe Benefits based on 
Expenditures through January 18, 2002 






FY 2001-2002 
Revised Budge: 



S9,433,169 



Actual 
Expenditures 
Through Pay 
Period Ending 

1/18/2002 



Projected 
Expenditures Projected Surplus 
Through June 30, (Deficit) 

2002 * 



S 5,033.585 



59,170,937 



S 262,23: 



All Salaries and Fringe 
Benefits Including 

Overtime S173,407,177** 93,445.563 170,9S5,918 $2,421,259 

* Projection based on actual spending through January IS, 2002. and projected spending for the 
remainder of the Fiscal Year, using average pay period method. 

*" Total salaries and fringe benefits budget amount includes all funds appropriated including the 
reserved amount of $1,000,286 for 10 Chiefs Operator positions and S1.624.S00 for Overtime. 



Board of Supervisors 

Budget Analyst 

3 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



As shown in the table above, the proposed release of $1,624,800 
in reserved funds for Overtime would result in a projected year- 
end surplus of $2,421,259 as detailed below for all Salaries and 
Mandatory Fringe Benefits, including Overtime: 





Surplus 


Account 


(Deficit) 


Permanent Salaries 


$2,504,036 


Temporary Salaries, Premium, One-Time 




Retirement Buyouts and Holiday Pay 


(766,280) 


Mandatory Fringe Benefits 


421,271 


Overtime 


262.232 


Total 


$2,421,259 



As shown in the table above, since a net surplus of $2,421,259 in 
Salaries and Mandatory Fringe Benefits, including Overtime, 
results from the Controller's straight line projections, the subject 
requested $1,624,800 in reserved funds for Overtime should not 
be released at this time, and should be returned to the General 
Fund at yearend unless the Fire Department subsequently 
justifies the need for additional Overtime prior to June 30, 2002. 

Contrary to the Controller's projections, the Fire Department's 
current spending plan for the remainder of FY 2001-2002 
projects substantial increases in Overtime spending over the 
remainder of the current fiscal year. Overall, the Fire 
Department is projecting a budget deficit of $563,615 for 
Salaries and Mandatory Fringe Benefits, including Overtime 
instead of realizing a surplus of $2,421,259 based on the 
Controllers straight line projections. According to Ms. Christine 
Ragan of the Fire Department, the Fire Department's projected 
need for an additional $563,615 in excess of this subject request 
of $1,624,800 has been caused primarily from the recently 
approved Memoranda of Understanding which granted total 
Firefighter salary increases of eight percent during FY 2001- 
2002. 

The Budget Analyst has analyzed the Fire Department's actual 
Overtime expenditures for all of Fiscal Year 2000-2001 and for 
Fiscal Year 2001-2002 to date. Contrary to the Fire Department 
projections and consistent with the Controller's straight line 
projections, the Budget Analyst has concluded that a projected 
surplus, and not a deficit, in Salaries and Mandatory Fringe 



Board of Supervisors 
Budget Analyst 

4 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Benefits, including Overtime, is likely to occur, based in part on 
the following: 

« The current-year budget was previously revised, as approved 
by the Board of Supervisors, to reflect the addition of funds 
from the General Fund Salaries and Benefits Reserve for the 
MOU-approved salary increases for Fire Department 
personnel. 

• After 15 pay periods in the current year representing 57.7 
percent of the 26 pay periods, the Department has spent 
$5,033,585 for Overtime or 53.4 percent of the $9,433,169 
budget for Overtime; 

• At this same time last fiscal year, the Department had spent 
$8,362,375 or 74.1 percent of that year's total Overtime 
expenditures of $11,290,160. 

Attachment I to this report is a table and chart of FY 2000-2001 
Overtime expenditures compared to FY 2001-2002 Overtime 
■■xpenditures through the first 15 pay periods of the fiscal year 
(i.e., through February 15, 2002) and the Fire Department's 
projections for the remainder of the fiscal year. The Fire 
Department's Spending Plan projections shown in Attachment I 
would result in total FY 2001-2002 Overtime expenditures of 
$11,166,009 or $1,732,840 more than the Overtime budget of 
$9,433,169. In total, the Fire Department's spending plan 
projects deficit spending for Salaries and Mandatory Fringe 
Benefits, including Overtime, of $563,615 for FY 2001-2002 due 
primarily to deficit projection for Overtime of $1,732,840. 

T Iowever, Attachment II shows a projection made by the Budget 
Analyst for Overtime expenditures in which the Budget Analyst 
projects Overtime for the remainder of Fiscal Year 2001-2002 
based on the average Overtime expenditures during the first 15 
pay periods of FY 2001-2002 adjusted for the latest four percent 
Firefighter salary increase granted on January 5, 2002. The 
Budget Analyst's projection would result in total FY 2001-2002 
Overtime expenditures of $9,450,150 which is $16,981 more 
than the FY 2001-2002 Overtime budget of $9,433,169 but is 
$1,715,859 less than the Fire Department's projected Overtime 
spending of $11,166,009 as shown in Attachment I. The Budget 
Analyst believes that his projected level of Overtime spending is 
on the high side and would result in an overall surplus for Fire 
Board of Supervisors 
Budget Analyst 
5 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 

Department Salaries and Mandatory Fringe Benefits, including 
Overtime, of approximately $2,000,000 in FY 2001-2002. This 
compares with the Controller's straight line projected surplus of 
$2,421,259. 

The Budget Analyst has also made a second projection, shown in 
Attachment III to this report. Attachment III shows Overtime 
expenditure projections for the remainder of FY 2001-2002 
based on 110 percent of the amount expended in the same pay 
period in FY 2000-2001 plus Firefighter salary increases of eight 
percent. This projection would result in total FY 2001-2002 
Overtime expenditures of $8,256,428 or $1,176,741 less than the 
FY 2001-2002 Overtime budget of $9,433,169 and $2,909,581 
less than the Fire Department's projected Overtime spending of 
$11,166,009 as shown in Attachment I. Based on this level of 
Overtime spending, the Budget Analyst projects that the Fire 
Department would end Fiscal Year 2001-2002 with an overall 
surplus of approximately $3,200,000 in Salaries and Fringe 
Benefits, including Overtime. 

In summary the Budget Analyst is projecting a surplus for Fire 
Department Salaries and Fringe Benefits, including Overtime, 
ranging between $2,000,000 to $3,200,000, while the Controller's 
straight line projections results in a surplus of $2,421,259 and 
the Fire Department has projected a deficit of $563,615. 

The combination of these results strongly suggests that the 
requested release of reserved funds in the amount of $1,624,800 
for Overtime is not necessary at this time. Therefore, the Budget 
Analyst recommends that the Finance Committee not release 
the currently reserved funds for additional Overtime at this 
time. 

Comments: 1. The sublease between the City and County of San Francisco 

and the Treasure Island Development Authority, for the Fire 
Department to pay rent to Treasure Island for the use of 
training facilities at Treasure Island, was approved by the 
Board of Supervisors on June 4, 2001, through adoption of 
Resolution No. 456-01 (File No. 01-0699). Approval of this 
subject request for the release of $1,764,000 will enable the Fire 
Department to make the sublease payment to Treasure Island 
in conformance with terms of the approved sublease. 



Board of Supervisors 

Budget Analyst 

6 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



2. The Budget Analyst's recently released Management Audit 
Report of the Fire Department addresses the need for and 
potential benefits from a centralized training facility. The 
Treasure Island site is one of three Fire Department training 
sites. The other two sites include the Paramedic training facility 
in the Presidio and the Fire College facility at Station Seven on 
Folsom Street currently operated by the Fire Department for 
training purposes. The Budget Analyst therefore recommended 
in his Management Audit Report that a complete cost/benefit 
assessment of alternatives for a centralized training facility be 
presented to the Fire Commission, the Mayor and the Board of 
Supervisors within one year of the date of the Management 
Audit Report. As noted above, in June of 2001, the Board of 
Supervisors approved the sublease agreement between the Fire 
Department and Treasure Island (File 01-0169). The Budget 
Analyst therefore recommends approval of the release 
$1,764,000 for the Fire Department's rental payment to 
Treasure Island for FY 2001-2002. 

3. There were no specific conditions attached to the Finance 
Committee's recommended reserve of funds for 10 H10 Chiefs 
Operator positions. These positions are exempt from 
competitive Civil Service selection and serve at the pleasure of 
the Chief of the Fire Department in accordance with Charter 
Section 10.104. Such positions are also specified in 
Administrative Code Section 2A.91 among the several ranks of 
uniformed positions in the Fire Department. The Fiscal Year 
2001-2002 approved budget reflects $5,001,430 in Salaries and 
Mandatory Fringe Benefits for 50 H10 Chiefs Operator 
positions. The Budget Analyst considers release of this reserve 
to be a policy decision for the Board of Supervisors. 

4. The Fire Department began FY 2001-2002 with 1,763 
Uniformed Officers (excluding staffing for the Emergency 
Communications Unit). Since that time, the Department's 
uniformed staffing has changed as shown in the table below. 



Board of Supervisors 
Budget Analyst 

7 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Changes to Fire Uniformed Staffing Since July 1, 2001 
(Excluding Communications Unit) 

Uniformed Staffing on July 1, 2001 1,763 

New Hires 

Academy Class Started 7/9/2001 35 

Lateral Transfer Class Started 9/4/2001 _5 

Total Hires 40 

Attrition : 

Service or Disability Retirement (38) 

Resignations (13) 

Released/discharged from probationary status (1) 

Deaths (!) 

Total Attrition (53) 

Uniformed Staffing as of February 1, 2002 1,750 

Planned Hiring of Lateral Transfers 6 

Total Projected Fire Department Staffing 

at end of FY 2001-2002 1,756 

As noted in the above table, in addition to the current uniformed 
staffing of 1,750, the SFFD intends to hire 6 lateral 
Firefighter/Paramedics who will begin their eight-week training 
in early April of 2002. Therefore, new hires for FY 2001-2002 
will total 46 (40 hired to date and 6 to be hired in early April of 
2002), and total uniformed staffing will increase to 1,756 (1,750 
current uniformed staff plus 6 new hires). The Fire Department 
will therefore not meet its stated FY 20001-2002 goal to hire 78 
new Uniformed Officers. The SFFD has not met this goal of 
hiring 78 new Uniformed Officers this fiscal year, primarily 
because the number of separations from the Department was 
lower than expected (53 separations compared to a projected 90 
separations), allowing the minimum daily staffing requirement 
of 354 uniformed staff to be maintained without additional new 
hires. 

5. In summary, the Fire Department will have hired 46 new 
Uniformed Officers during FY 2001-2002, or 32 less than the 
planned hiring of 78. The Department will have experienced a 
net reduction of seven uniformed positions in this period from a 
total of 1,763 on July 1, 2001 to 1,756 projected for the end of FY 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 

2001-2002 assuming no further attrition during the remainder 
of the Fiscal Year. 

6. The Department's current level of Overtime expenditures is 
reflected in the pattern of daily Overtime shifts required to 
maintain the minimum daily staffing of 354 Firefighters. A 
comparison of daily Overtime shifts and absenteeism is shown 
below. 

Comparisons of Fire Department Overtime Shifts per Day and 
Absenteeism - FY 2000-2001 and FY 2001-2002 to Date 



FY FY 2001-2002 January 

Category 2000-2001 to Date 2002 

Number of permanent Firefighters 420.08 433.66 431.26 

scheduled for Duty per Day 
Total Absences per Day 89.47 96.80 87.13 

Daily Average Overtime Shifts 

required to maintain minimum 21.50 16.85 7.87 

staffing 
Breakdown of Significant 
Types of Absences 

Sick Pay per day 

Disability Pay per day 

Modified Duty per day 
Total Absent per day 

As shown in the table above, the total number of Firefighter 
personnel scheduled for duty each day has increased from an 
average of 420.08 in FY 2000-2001 to 433.66 for FY 2001-2002 to 
date. Total absences have also increased, from a daily average of 
89.47 in FY 2000-2001 to 96.80 for FY 2001-2002 to date. 
However, the daily average of total absences has declined to 
87.13 for the month of January of 2002. 

The effect of increased total Firefighter staffing scheduled for 
duty each day less absences has resulted in an overall decline in 
the average number of Overtime shifts required to meet daily 
minimum staffing requirements. For FY 2000-2001, an overall 
average of 21.50 Overtime shifts per day were worked. For 
FY2001-2002 to date, total Overtime shifts have averaged 16.85 
per day. Lastly, for the month of January of 2002, total 
Overtime shifts per day have averaged 7.87. Therefore, average 

Board of Supervisors 

Budget Analyst 

9 



24.56 


20.23 


16.53 


20.06 


19.80 


17.23 


12.53 


17.51 


18.26 


89.47 


96.80 


87.13 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



daily absences during the first seven months FY 2001-2002 of 
96.8 Firefighters have exceeded average daily absences of 89.47 
in FY 2000-2001 However, the Fire Department has reduced 
total absences to 87.13 for the month of January of 2002, 
indicating recent improvement in this area. 

7. The Budget Analyst's Management Audit of the Fire 
Department addresses the problems contributing to high Fire 
Department absenteeism rates and Overtime costs and 
recommended a comprehensive set of measures to improve 
attendance and reduce Overtime expenditures. The 
Management Audit Report is currently scheduled for a hearing 
before the Board of Supervisors Rides and Audits Committee on 
March 19, 2002. 



Recommendations: 1. The Budget Analyst recommends that the requested release 
of reserved funds in the amount of $1,624,800 for Overtime be 
disapproved based on the projection of both the Controller and 
Budget Analyst as described above. These funds should continue 
to be reserved by the Finance Committee. 

2. The Budget Analyst considers the release of reserved funds in 
the amount of $1,000,286 for the Salaries and Mandatory Fringe 
Benefits for 10 Chiefs Operator positions to be a policy matter 
for the Board of Supervisors in accordance with Comment No. 3 
above. 

3. The Budget Analyst recommends approval of the requested 
release of the reserved amount of $1,764,000 for the Fire 
Department to make the FY 2001-2002 sublease rental payment 
to Treasure Island for use of training facilities at Treasure 
Island, in accordance with Comment no. 1 above. 



Board of Supervisors 

Budget Analyst 

10 



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Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Item 2 - File 02-0147 

Department: 

Item: 

Purposes of Lease: 

Lessor: 



Lessee: 

Number of Sq. Ft. 
and Cost Per Month 
Payable by Los Altos 
Hotel Associates: 



Amount Payable by 
Los Altos Hotel 
Associates to PUC: 



Public Utilities Commission (PUC) 

Resolution authorizing a ten (10) year lease of City-owned 
land located in Santa Clara County between the Public 
Utilities Commission and Los Altos Hotel Associates. 

The proposed City-owned land would be used by the Los 
Altos Hotel Associates, located in the City of Los Altos, for 
parking, recreation, landscaping, ingress and egress. 

City and County of San Francisco, acting by and through 
its Public Utilities Commission 

Los Altos Hotel Associates 



Approximately 47,916, of which 13,500 square feet, or 
28.2 percent, would be leased by the PUC to Los Altos 
Hotel Associates at a rental rate of $3,240 per month 
($38,880 annually), which is $0.24 per square foot per 
month or $2.88 per square foot annually. As discussed in 
Comment No. 1, the PUC would not charge Los Altos 
Hotel Associates any rent for the remaining 34,416 
square feet (47,916 less 13,500). 



$38,880 annually. This annual rent would be adjusted 12 
months after the commencement date of the lease, and 
then readjusted every 12 months thereafter, by the 
annual percentage increase in the Consumer Price Index 
(CPI). In addition to the annual CPI rent adjustment, the 
base rent would be adjusted to equal the prevailing fair 
market rental rate as of the beginning of the sixth year of 
the subject ten-year lease as determined by the PUC's 
Bureau of Commercial Land Management in consultation 
with the Division of Real Estate. 



Term of Lease: 



Ten years 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Description: 



The subject resolution would authorize a 10-year lease of 
approximately 47,916 square feet of City-owned land 
located in the City of Los Altos, Santa Clara County, 
which is under the jurisdiction of the PUC, to Los Altos 
Hotel Associates. The PUC's Bay Division Pipelines 3 and 
4, which are located under the subject property, transport 
and distribute water for the San Francisco Water 
Department. Under the proposed lease, the PUC would 
retain all rights to operate, maintain, repair and/or 
reconstruct those pipelines. 

Of the 47,916 square feet of PUC land which would be 
leased to Los Altos Hotel Associates, 13,500 square feet 
would be used for a paved parking lot and for a recreation 
area. The remaining 34,416 square feet of PUC land 
would be used for landscaping and ingress and egress to 
a hotel complex on adjacent property being developed by 
Los Altos Hotel Associates. The paved parking lot and 
the recreation area would be used for the hotel complex. 
The subject 47,916 square feet of land consists of a 
narrow parcel. The PUC's Bay Division Pipelines 3 and 4, 
located under the parcel, bisect a portion of a larger, 
rectangular shaped parcel owned by Los Altos Hotel 
Associates. 



Comments: 



1. According to Ms. Cindy Lee of the PUC, when the PUC 
originally purchased its pipeline property on the 
Peninsula from various property owners, the sellers of 
such property reserved the rights to cross over and farm 
on the properties in accordance with the deeds of sale. 
Therefore, the resulting grant deeds contain provisions 
which reserve cross-over and agricultural rights for the 
owners of the adjacent properties. As the current owner 
of an adjacent property, Los Altos Hotel Associates 
retains those cross-over and agricultural rights. In light 
of such grant deeds, the PUC has a policy to not charge 
rent to the owners of adjacent properties for ingress and 
egress and for landscaping purposes. Mr. Charles Sullivan 
of the City Attorney's Office has confirmed that the PUC's 
policy is consistent with the language of the existing 
grant deeds. Of the subject parcel's approximately 47,916 
square feet, 34,416 square feet, or approximately 71.8 
percent, would be utilized for landscaping and for ingress 
and egress purposes. In keeping with the PUC's policy, 
the PUC does not charge rent for such purposes. The 

Board of Supervisors 
Budget Analyst 

15 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



remaining 13,500 square feet, or approximately 28.2 
percent, would be utilized for the hotel complex as a 
paved parking lot and a recreation area for which the 
PUC would charge rent as previously noted. 

2. Ms. Lee advises that a valuation of current market 
rental rates of the subject property was performed by the 
PUC's Bureau of Commercial Land Management and that 
the proposed lease rate of $0.24 per square foot per month 
represents the fair market value. According to Ms. Lee, 
the fair market rental rate valuation and review was 
based on (a) an analysis of sales of comparable properties 
in the Los Altos area (including the sale of the adjacent 
parcel to be developed into a hotel complex), (b) 
comparable PUC leases on the Peninsula, and (c) property 
sales information obtained from the real estate 
information service, Metroscan. Ms. Lee states that 
Metroscan is a real estate information service used by 
realtors and real estate appraisers which provides a 
monthly update of property sales and rental rates by 
geographical area. 

3. According to Ms. Lee, the subject property has no use 
to any other adjacent property owner. As the subject 
property is only 80 feet wide and cannot have structures 
built on it, it is suitable only for vehicular parking 
purposes and for recreational purposes. 



Recommendation: Approve the proposed resolution. 



Board of Supervisors 

Budget Analyst 

16 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Item 3 - File 02-0317 

Department: 

Item: 

Amount: 
Source of Funds: 
Description: 



Department of Public Health (DPH) 

Hearing to consider the release of reserved funds for the 
Department of Public Health in the amount of $60,000. 

$60,000 

Join Together, a nonprofit organization 

This DPH request is for the release of $60,000 in grant 
monies previously reserved by the Board of Supervisors. 
The funds were placed on reserve by the Board of 
Supervisors, pending development of a program plan and 
submission of budget details to the Board of Supervisors 
(File 01-1096). 

Ms. Kirsten Melbye of DPH states that the subject 
$60,000 in grant funds were originally awarded to DPH 
by Join Together, a nonprofit organization who is 
affiliated with the Boston University School of Public 
Health, for a one-year period, to implement "a social 
marketing campaign to reduce the 'Not in my backyard' 
(NIMBY) attitude that many San Franciscans held 
towards neighborhood substance abuse treatment." Ms. 
Melbye advises that one of the overarching goals of Join 
Together is to increase demand for substance abuse 
treatment in grantee cities, of which San Francisco is one 
of 16. According to Ms. Melbye, the purpose of the social 
marketing campaign was to obtain community support for 
expanding substance abuse services throughout San 
Francisco in the future. However, as explained in the 
attached memorandum (Attachment I), provided by DPH. 
"the financial and political priorities of the City shifted as 
a result of the downturn of the economy in 2001 and 
funding that was slated for expanding substance abuse 
treatment services was reallocated." Therefore, DPH, in 
consultation with Join Together, decided that instead of 
implementing the original social marketing campaign, 
grant funds should instead be used to provide "substance 
abuse screenings and outreach referral case management 
to better suit the current situation." 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

17 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



DPH is now requesting that the $60,000 in grant monies 
be released to train DPH physicians and nurses to 
conduct substance abuse screenings and counseling at two 
Public Health Clinics and to provide substance abuse 
treatment referral case management in the Bayview 
District. 

Ms. Melbye states that $34,000 of the subject grant 
monies would be allocated to California Society for 
Addiction Medicine, a nonprofit organization, to train 
DPH physicians and nurses at the Tom Waddell Public 
Health Clinic, located at 50 Ivy Street, and the Potrero 
Hill Public Health Clinic, located at 1050 Wisconsin 
Street. The training would concentrate on how to quickly 
screen patients for substance abuse problems and how to 
provide patients with brief substance abuse counseling or 
referrals to substance abuse treatment services as 
needed. Ms. Melbye advises that the contract with the 
California Society for Addiction Medicine would begin on 
April 1, 2002 and is expected to be completed by February 
28, 2003. 

Ms. Melbye advises that $25,000 of the subject grant 
monies would be allocated to Positive Directions Equals 
Change, a nonprofit organization that is an existing DPH 
contractor. Positive Directions Equals Change would 
provide outreach and referral case management services 
related to substance abuse treatment in the Bayview 
District. According to Ms. Melbye, Positive Directions' 
Case Managers would make initial contact with potential 
substance abuse treatment clients on the street, in 
shelters and elsewhere in the Bayview District and refer 
those individuals to appropriate treatment programs 
and/or medical services. The Case Managers would also 
follow-up with those individuals to assure that they 
receive the appropriate treatment or determine the 
reasons why treatment was not received. According to 
Ms. Melbye, the objective of the outreach and referral case 
management services is to increase the likelihood that 
under-served client populations obtain access to 
substance abuse treatment. Ms. Melbye advises that the 
contract with Positive Directions Equals Change would 
begin on April 1, 2002 and is expected to be completed by 
December 31, 2002. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

18 



Memo to Finance Committee 

March 6, 2002 Finance Committee Meeting 



Budget: 



A summary budget for the requested release of reserved 
funds is as follows: 



Comments: 



Contract Costs 

California Society for Addiction Medicine 

Contract Costs 

Positive Directions Equals Change 

DPH Travel Costs 

Total Project Costs 



$34,000 



$25,000 

$ 1.000 
$60,000 



Attachment II, provided by DPH provides additional 
budget details for the nonprofit contractor costs and the 
DPH travel costs. 

1. According to Ms. Melbye, Join Together has approved 
the use of the subject grant funds in the amount of 
$60,000 for the proposed project. 

2. Ms. Melbye advises that none of the $60,000 in 
requested funds has been expended and no obligations 
have been incurred. 



Recommendation: 



3. According to Ms. Melbye, California Society for 
Addiction Medicine and Positive Directions Equals 
Change were both selected on a sole source basis because 
of their expertise in substance abuse matters. 

Approve the requested release of reserved funds of 
$60,000. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

19 



Attachment I 



MemorandLim 



To: Harvey Rose 

CC: Maureen Singleton 

From: Kirsten Melbye, M.H.S. 

Date: 02/28/02 

Re: Demand Treatment grant 



When Community Substance Abuse Services (CSAS) applied to be a Demand Treatment 
partner in February 2001, the initial proposal was to develop and conduct a social marketing 
campaign to reduce the "Not in my backyard" (NIMBY) attitude that many San Franciscans 
held towards neighborhood substance abuse treatment. This attitude had reduced, and in 
some cases, blocked the siting and expansion of substance abuse treatment programs in the 
city. Unfortunately, the financial and political priorities of the city shifted as a result of the 
downturn of the economy in 2001 and funding that was slated for expanding substance 
abuse treatment services was reallocated. Therefore, it was decided that the original social 
marketing campaign would not be the ideal way to develop this partnership and the 
direction of the grant was changed to brief screenings and outreach referral case 
management to better suit the current situation. 

Brief screenings for drug and alcohol abuse will be implemented at Potrero Hill and Tom 
Waddell Health Centers. These screenings will be administered by the physician or nurse 
upon intake. The California Society for Addiction medicine (CSAM) will assist in 
developing the brief screening tool and will train physicians and nurses on the survey as 
well as brief counseling techniques and resources for a treatment referral network. 

Positive Directions Equals Change (PDEC) will be responsible for conducting substance 
abuse referral case management in the Bayview District. This will involve making initial 
contacts with clients on the street, in shelters, etc., and referring the individuals to 
appropriate treatment and/or medical services. The case manager will be responsible for 
following up with the client to determine if he or she received services and if no services 
were obtained, reasons for this and how they may be overcome. The Project Manager at 
CSAS will monitor PDEC to ensure that both the outreach and case management component 
are carried out. 

The grant was held on reserve since July 2001, so no monies have been expended. The new 
grant period will be from March 1, 2002, to February 23, 2003. The contract for CSAM 
will be from April 1, 2002, to February 28. 2003, and PDEC will be from April 1, 2002, to 
December 31, 2002. 



20 



Community Substance Abuse Services 
San Francisco Demand Treatment! Update Budget 



Attachment II 



DPH Travel 



(required grantee meeting) 



1,000 



CONSULTANT/CONTRACTUAL AGREEMENTS 

Training for Providers 

Contractor: CA Society for Addiction Medicine 

Trainers 3 trainings @ 35,000/training 

Training Facilities 5500/day x 3 days) 
Refreshments S20 pp x 40 x 3 

Training brochures, materials & supplies 
Consultation - Post training 
Seminar 

Subtotal Training 

Outreach/Case Management 

Contractor: Positive Directions for Change 



TBN 

TBN 



Outreach Worker/Referral Case Mgr. 35000 0.25 
Outreach Worker/Referral Case Mgr. 35000 0.25 



Fringe Benefits @ 22% 

Subtotal Personnel 

Outreach Materials and Supplies 
Duplication 

Subtotal Outreach/Case Mangement 

Subtotal ConsultantyContractual Agreements 

GRAND TOTAL 



15,000 
1,500 
2,400 
3,100 
9,000 
3,000 

34,000 



8,750 
8,750 

3,850 

21,350 

3,000 
650 

25,000 

59,000 

60,000 



epi research/dem trmt U Boston/DPH release Bgt.xls/2nd draft/2/28/02 



21 



Memo to the Finance Committee 

March 6, 2002 Finance Committee Meeting 



Item 4 - File 01-1216 

Note: This item was continued by the Finance Committee at its meeting of 
February 27, 2002. 

Department: Public Utilities Commission 

Hetch Hetchy 

Item: Hearing to consider the long-term contract entered into by the 

City and County of San Francisco and Calpine Energy. 

Description: In May of 2001, the City entered into a contract with Calpine 

Energy Services, LP for the purchase of electric power. The 
term of the contract was five years, commencing on July 1, 
2001 and ending on June 30, 2006. 

Under the terms of the contract, the City is required to 
purchase 50 megawatts of electric power per hour on a 
continuous basis. The price of this purchase is a) $115 per 
megawatt hour for the period of July 1, 2001 through 
December 31, 2001, and b) $75.25 per megawatt hour for the 
period of January 1, 2002 through June 30, 2006. 

For Fiscal Year 2001-2002, the City will be required to 
purchase a total of 438,000 megawatt hours at a total cost of 
$41,664,750. Over the five-year term of the contract, the City 
will be required to purchase a total of 2,190,000 megawatt 
hours at a total cost of $173,502,750. The average price per 
megawatt hour that the City is required to purchase is $79,225 
under the Calpine Energy Services contract. 

Comments: 1. Hetch Hetchy has traditionally purchased power from 

wholesale sources to meet its contractual obligations for the 
sale of electric power to its customers when it is unable to 
generate sufficient electric power from its hydro-electric power 
generation facilities. In FY 2000-2001, the price for such power 
on the spot market increased from a range of $20 to $40 per 
megawatt hour to $200 to $300 per megawatt hour. In 
February of 2001, Hetch Hetchy required a supplemental 
appropriation of $25,400,000 to meet the estimated increased 
expenditures resulting from the increased cost of such power 
on the spot market for FY 2000-2001 (File 01-0208). Ms. 
Laurie Park, General Manager of Hetch Hetchy reports that 
spot market prices moderated somewhat during the last four 
months of FY 2000-2001, and Hetch Hetchy's actual increased 

Board of Supervisors 
Budget Analyst 
22 



Memo to the Finance Committee 

March 6, 2002 Finance Committee Meeting 



expenditures for such purchases were approximately 
$19,700,000 or $5,700,000 less than the estimated increased 
cost of $25,400,000. 

2. The Calpine Energy Services Contract was entered into by 
the City to hedge against high prices for wholesale electric 
power over the next five years. The shortage of supply that 
resulted in the increases in the price of wholesale electric 
power during FY 2000-2001 was expected to continue for up to 
three years with resulting price volatility, according to PUC 
testimony to the Board of Supervisors during the consideration 
of the proposed contract, with lower prices in years four and 
five of the Calpine Energy Services Contract. 

3. Since the approval of the Calpine Energy Services contract, 
the price of wholesale electric power has fallen dramatically, 
due in part to reduced demand for electricity and mild weather 
during the summer months. Power generation and supply has 
also increased since the first six months of calendar year 2001. 
According to Ms. Park, the futures price for wholesale electric 
power for the third quarter of 2002 is $33 per megawatt hour. 
Also, at this time, the futures price for wholesale electric power 
for calendar year 2003 is $35 per megawatt hour according to 
Ms Park. These significantly lower futures prices has caused 
the value of a five year purchase contract such as the existing 
Calpine Energy Services contract to fall significantly. Ms Park 
states that if the City were to enter into a five year purchase 
contract, with a commencement date of January 1, 2003, the 
price would be $35 per megawatt hour. 

If the City were to enter into a five year contract for the 
mrchase of electric power at an average price of $35 per 
megawatt hour instead of $79,225 per megawatt hour, the 
price for the Calpine contract, the full cost would be 
$76,650,000, or $96,852,750 less than the $173,502,750 cost for 
the Calpine contract. 

4. Subsequent to the Board of Supervisors approval of the 
Calpine contract, at the request of the Finance Committee, the 
Budget Analyst has reviewed the financial information and the 
risk analysis which had been submitted to the Public Utilities 
Commission by Hetch Hetchy management prior to the PUC's 
approval of the Calpine contract in May of 2001. Based on this 
information, it was clear that the wholesale electric market 

Board of Supervisors 
Budget Analyst 

23 



Memo to the Finance Committee 

March 6, 2002 Finance Committee Meeting 



volatility and the $200 to $300 price per megawatt hour for 
such electricity at that time , created significant financial risk 
that could have resulted in Hetch Hetchy expenditures 
substantially exceeding operating revenues on an annual 
basis. 

The PUC approved the Calpine agreement, and recommended 
that the Board of Supervisors also approve the contract, in 
order to hedge against the likelihood, as indicated by wholesale 
market conditions in May of 2001, that the Hetch Hetchy 
enterprise fund would not be able to remain self supporting 
and fund required facilities maintenance and capital 
improvement projects. 

The Budget Analyst concludes that, based on the 
extraordinary wholesale electricity market volatility and 
wholesale prices during the first four months of 2001, and 
independent economic forecasts that such market volatility 
would remain for an extended period of time, the decision to 
enter into the Calpine contract by the Public Utilities 
Commission and the Board of Supervisors in May of 2001 was 
reasonable and prudent at that time. 

The Budget Analyst also concludes that the contract has 
resulted in significant profit for Calpine Energy Services, and 
a significant cost to the City in relation to current wholesale 
market conditions, since the contract was executed in May of 
2001. As previously noted, if the City had been able to enter 
into a five year contract for the purchase of electric power at 
an average price of $35 per megawatt hour instead of $79,225 
per megawatt hour, the full cost would have $76,650,000, or 
$96,852,750 less than the $173,502,750 cost for the Calpine 
contract. 

4. Representatives of the Public Utilities Commission and 
Hetch Hetchy will be in attendance at the February 27, 2002 
Finance Committee meeting to make a presentation to the 
Committee and to respond to the Committee's questions. 



Board of Supervisors 

Budget Analyst 
24 



Memo to the Finance Committee 

March 6, 2002 Finance Committee Meeting 




Harvey M. Rose 



cc: Supervisor Peskin 
Supervisor Daly 
Supervisor Maxwell 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



Board of Supervisors 
Budget Analyst 

25 



Citv and County of San Francisco c,t y Hal1 

' d 1 Dr. Carlton B. 

Meeting Minutes GoodiettPiace 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: Gail Johnson 

Wednesday, March 13,2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Sophie Maxwell. 



MEETING CONVENED 

The meeting convened at 12:35 p.m. 

020051 [Amending Article 2.4 of the Public Works Code and Sections 10-100.230 and 11.9 of the Administrative 
Code Concerning Excavation in the Public Right-of-Way; Proposed Increases in Certain Fees] 
Supervisors Peskin, Maxwell 

Ordinance amending Sections 2.4.2, 2.4.4, 2.4.10, 2.4.20.1, 2.4.20.2, 2.4.20.3, 2.4.23, 2.4.40, 2.4.41, 2.4.42, 
2.4.45, 2.4.46, 2.4.50, 2.4.53, 2.4.55, 2.4.70, 2.4.80, 2.4.81, 2.4.83, and 2.4.85 of Article 2.4 of the Public 
Works Code, adding Sections 2.4.20.4 to Article 2.4 of the Public Works Code, and amending Sections 10.100- 
230 and 1 1.9 of the Administrative Code to modify and adopt new definitions; modify and adopt new 
procedures for permit application submission, permit conditions, and permit modifications; modify fees for 
administration of permit applications and inspection of excavations; provide for a report to the Board of 
Supervisors about such fees; create a process for inspection fee refunds; modify procedures for assessing 
penalties; establish a utility conditions permit fee; and make technical conforming amendments. (Public Works 
Department) 

(Companion measure to Files 020133, 020134.) 

1/9/02, RECEIVED AND ASSIGNED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers; Harvey Rose, Budget Analyst; Cynthia Chono, Manager, Street Construction 

Coordination Center, Department of Public Works; Douglas Legg, Finance and Budget Division, Department of Public Works 

Supervisors Peskin and Maxwell added as co-sponsors. 

Continued to 3/13/02. 

3/1 1/02, SUBSTITUTED. Supervisor Peskin submitted a substitute ordinance bearing new title. 

3/1 1/02, ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Cynthia Chono. Manager, Street Construction 

Coordination Center, Department of Public Works; Edward Harrington. Controller. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco I Primed at ft 15 /' I ' 



Finance Committee Meeting Minutes March 13, 2002 



020133 [Funding to improve services of the Street Construction Coordination Center] 
Supervisors Peskin, Maxwell 

Ordinance appropriating $66,255 from Excavation Fees to increase services of the Street Construction 
Coordination Center for the Public Works Department for fiscal year 2001-02. (Public Works Department) 

(Companion measure to Files 20051 and 020134.) 

1/30/02, RECEIVED AND ASSIGNED to Finance Committee. Department requests that Files 020051, 020133, and 020134 be 

scheduled for consideration on the same date. 

2/1/02, SUBSTITUTED. Substituted by Department of Public Works 2/1/02, bearing new title. 

2/1/02, ASSIGNED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Cynthia Chono, Manager, Street Construction 

Coordination Center, Department of Public Works; Douglas Legg, Finance and Budget Division, Department of Public Works. 

Supervisors Peskin and Maxwell added as co-sponsors. 

Continued to 3/13/02. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Cynthia Chono. Manager. Street Construction 
Coordination Center, Department of Public Works; Edward Harrington, Controller. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020134 [Public Employment] 

Ordinance amending Ordinance No. 171-01 (Annual Salary Ordinance 2001/02) reflecting the creation of four 
positions at the Department of Public Works. (Human Resources Department) 

(Fiscal impact.) 

2/4/02, SUBSTITUTED. Substituted by Department of Human Resources 2/4/02, bearing new title. 

2/4/02, RECEIVED AND ASSIGNED to Finance Committee. Department requests that Files 020051, 020133, and 020134 be scheduled 

for consideration on the same date. 

2/4/02, ASSIGNED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers; Harvey Rose, Budget Analyst; Cynthia Chono, Manager, Street Construction 

Coordination Center, Department of Public Works; Douglas Legg, Finance and Budget Division, Department of Public Works. 

Continued to 3/13/02. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Cynthia Chono, Manager, Street Construction 
Coordination Center, Department of Public Works; Edward Harrington, Controller. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 2 Printed at 6:05 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



March 13, 2002 



020059 [Reserved Funds, Human Resources Department] 

Hearing to request release of reserved funds, Department of Human Resources (Fiscal Year 2001-02 Budget), 
in the amount of $8,901,795 to fund the remaining salary and fringe benefits for the Special Assistant positions. 
(Human Resources Department) 

1/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. Department requests this item be calendared at the January 30, 2002 
meeting. 

1/23/02, CONTINUED. Heard in Committee. Speakers: Edward Harrington, Controller; Steve Kawa, Mayor's Office; Jonathan 
Holtzman, Mayor's Office; Geoffrey Rothman, Director, Employee Relations Division, Department of Human Resources; Carol Isen, 
Associate Director, Local 21; Jean Mariani. 
Continued to 1/30/02. 

1/30/02, AMENDED. Heard in Committee. Speakers: Jonathan Holtzman, Mayor's Office; Andrea Gourdine, Human Resources 
Director; David Novogrodsky, International Federation of Professional and Technical Engineers, Local 21; Harvey Rose, Budget Analyst; 
Todd Rydstrom, Controller's Office. 

Release of reserved funds in the amount of $2,543,370 (1/5 of funds requested) approved. Consideration of remainder (510,173,480) 
continued to the Call of the Chair. 

Title of hearing amended by replacing "$12,716,850" with "$10,173,480." 
1/30/02, CONTINUED AS AMENDED. 

2/27/02, AMENDED. Heard in Committee. Speakers: Jonathan Holtzman, Mayor's Office; David Novogrosky, International Federation 
of Professional and Technical Engineers, Local 21 ; Abdalla Megahed. 

Release of reserved funds in the amount of $1,271,685 (two weeks of funds) approved. Consideration of remainder ($8,901,795) 
continued to 3/13/02. Title of hearing amended by replacing "$10,173,480" with "$8,901,795." 
2/27/02, CONTINUED AS AMENDED. 

Heard in Committee. Speakers: Geoffrey Rothman, Director, Employee Relations Division, Human 
Resources Department; Josh Kaufman. 

Release of reserved funds in the amount of $8,901 , 795 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020125 [Reserved Funds, Treasure Island Project] 

Hearing to consider release of reserved funds, Treasure Island Project (fiscal year 2001-2002 budget), in the 
amount of $237,002 for salaries and fringe benefits consistent with other City Departments/Special Assistants 
included in the Citywide Management Classification/Compensation Plan (MCCP). (Mayor) 
1/22/02, RECEIVED AND ASSIGNED to Finance Committee. 

2/6/02, AMENDED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Annemane Conroy, Executive Director, Treasure 
Island Development Authority. 

Release of reserved funds in the amount of $67,715 approved. (1/5 of funds requested) approved. Consideration of remainder 
($270,860) continued to the Call of the Chair. 
Title of hearing amended by replacing "$338,575" with "$270,860." 
2/6/02, CONTINUED AS AMENDED. 

2/27/02, AMENDED. Heard in Committee. Speakers: Jonathan Holtzman, Mayor's Office; David Novogrosky, International Federation 
of Professional and Technical Engineers, Local 21; Abdullah Nigeri. 

Release of reserved funds in the amount of $33,858 (two weeks of funds) approved. Consideration of remainder ($237,002) continued to 
3/13/02. Title of hearing amended by replacing "$270,860" with "$237,002." 
2/27/02, CONTINUED AS AMENDED. 

Heard in Committee. Speakers: Geoffrey Rothman, Director, Employee Relations Division, Human 
Resources Department; Josh Kaufman. 

Release of reserved funds in the amount oj $23/ ',002 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



City and County of San Francisco 



Primed at 6:05 I'M on < .' 04 



Finance Committee Meeting Minutes March 13, 2002 



020246 [Safety Retirement] 

Resolution implementing MOU provision and authorizing an amendment to correct an error in the contract 
between the Board of Administration of the Public Employees' Retirement System and the Board of 
Supervisors of the City and County of San Francisco. (Human Resources Department) 
2/17/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speaker: Alice Villagomez, Deputy Director, Employee Relations Division, Human 
Resources Department. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



020244 (Lease Agreement - Breda Transportation, Inc.] 

Resolution approving a lease agreement with Breda Transportation, Inc. and the City and County of San 
Francisco operating by and through the San Francisco Port Commission for shed space, loading dock space and 
office space at Pier 80, San Francisco, California. (Port) 
2/15/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Taline Sanassarian, Port; Phil Williamson, 
Property Manager for the Southern Waterfront, Port; Josh Kaufman. 
RECOMMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



011 773 [Reserved Funds, Department of Elections] 

Hearing to consider release of reserved funds, Department of Elections, fiscal year 2001-02 budget, in the 
amount of $32,237 for the reapportionment project. (Elections Department) 

10/2/01, RECEIVED AND ASSIGNED to Finance Committee. Department requests this item be calendared at the October 17, 2001 
meeting. 

10/17/01 , CONTINUED TO CALL OF THE CHAIR. Hearing held. Speakers: Harvey Rose, Budget Analyst; Tammy Haygood, Director 
of Elections; Chris Bowman, former member, Citizens Advisory Committee on Elections. 

2/27/02, AMENDED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Tammy Haygood. Director of Elections; Edward 
Harrington, Controller. 

Release of reserved funds in the amount of $221,000 approved. Consideration of remainder ($32,237) continued to 3/13/02. Title of 
hearing amended by replacing "$253,237" with "$32,237." 
2/27/02, CONTINUED AS AMENDED. 

Heard in Committee. Tammy Haygood, Director of Elections; Quintin Mecke, Task Force on Redisricting; 
Harvey Rose, Budget Analyst. 
Continued to March 20, 2002. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Maxwell 



ADJOURNMENT 



The meeting adjourned at 1:25 p.m. 



City and County of San Francisco 4 Printed at 6:05 PM on 3/2/04 






CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



March 7, 2002 



TO: ^Finance Committee 

FROM: .Budget Analyst 

SUBJECT: March 13, 2002 Finance Committee Meeting 

Items 1. 2. and 3- Files 02-0051, 02-0133 and 02-0134 



DOCUMENTS DEPT. 
M4R ) 2 2002 

SKSK 



Note: These items were continued by the Finance Committee at its meeting of 
February 27, 2002. In accordance with the request of the Finance 
Committee, this legislation has been amended to increase the proposed fees 
in order for the City to recover Countywide costs as defined by the City and 
County's Cost Allocation Plan (COWCAP). (See Comment No. 5.) 

Department: Department of Public Works (DPW) 

Street Construction Coordination Center (SCCC) 

Item: File 02-(K)51 

Ordinance amending various Sections of Article 2.4 of the 
Public Works Code, adding Sections 2.4.20.4 to Article 2.4 of 
the Public Works Code, and amending Sections 10.100-230 
and 11.9 of the Administrative Code to modify and adopt new 
definitions; modify and adopt new procedures for permit 
application submission, permit conditions, and permit 
modifications; modify fees for administration of permit 
applications and inspection of street excavations; provide for 
a report to the Board of Supervisors within one year after the 
adoption of the proposed fees and every three years 
thereafter regarding whether such fees allowed DPW to 
recover actual costs and recommending adjustments to the 
fees if appropriate; create a process for inspection fee refunds 
if a project is completed before the permit expiration date; 
modify procedures for assessing penalties; establish a utility 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



Amount: 
Source of Funds: 



conditions permit fee (see Comment No. 4); and make 
technical conforming amendments. 

File No. 02-0133 (Supplemental Appropriation 
Ordinance) 

Ordinance appropriating $66,255 from Excavation Fees to 
increase services of the DPW Street Construction 
Coordination Center. 

$66,255 

Excavation Fees deposited to the Special Revenue Public 
Works Excavation Fund 

File No. 02-0134 (Amendment to Annual Salary 
Ordinance FY 2001-2002) 

Ordinance amending Ordinance No. 171-01 (Annual Salary 
Ordinance FY 2001-2002) reflecting the creation of four new 
positions in the Department of Public Works for the DPW 
Street Construction Coordination Center. 



Description: File 02-0051 

Mr. Douglas Legg of DPW advises that the proposed 
ordinance would amend various sections of the Article 2.4 of 
the Public Works Code to allow DPW to increase its 
inspection and administrative/permit fees to fully recover the 
costs of the DPW Street Construction Coordination Center, 
which is responsible for administering the issuance of 
permits fpr the City's Excavation Code and for performing 
inspections of excavation projects. Mr. Legg explains that in 
1998 the Board of Supervisors added Article 2.4, Excavation 
in the Public Right-of-Way (Excavation Code), to the City's 
Public Works Code and that it became effective on January 1, 
1999. Mr. Legg advises that street excavations occur when it 
is necessary to install, repair or replace any of the various 
gas, electric, water, sewer, telephone, traffic signal, cable 
television, steam and other utility lines beneath the City's 
streets. Mr. Legg explains that such street excavation work 
is performed by private entities such as PG&E, AT&T, and 
Pacific Bell, as well as by City Departments including the 
Municipal Railway (MUNI) and the Water Department. Mr. 
Legg further advises that the Excavation Code established 
the DPW Street Construction Coordination Center for the 
purpose of coordinating excavations by these various pubhc 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

and private agencies. The objective of such coordination on 
the part of DPW is to reduce the number and duration of 
excavations through the close coordination of all of the 
agencies involved, according to Mr. Legg. Article 2.4 includes 
a special Public Works Excavation Fund for the deposit of 
excavation fees charged by DPW to applicable agencies. Such 
excavation fees provide the funding source for the DPW 
Street Construction Coordination Center. Mr. Legg advises 
that currently, the Street Construction Coordination Center 
budget for FY 2001-2002 is $1,376,824, as previously 
approved by the Board of Supervisors. 

Mr. Legg advises that the proposed ordinance would amend 
various sections of Article 2.4 of the Public Works Code, as 
well as sections of the Administrative Code. Specifically, the 
proposed ordinance would provide for a new fee structure for 
street excavation projects. Such projects would be classified 
by size and administrative/permit and inspection fees would 
be charged accordingly. As stated in Attachment I, provided 
by DPW, the proposed fees would result in an estimated 196 
percent increase in annual revenues to DPW for 
administrative/permit fees. The proposed 

administrative/permit fees would increase from 154 percent 
to 340 percent for average-sized small, medium, and large 
projects, as shown in Attachment I. The proposed inspection 
Fees would increase from 35 percent to 827 percent for 
average-sized small, medium, and large projects, as shown in 
Attachment I. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



File 02-0133 

File 02-0133 is an ordinance appropriating $66,255 to DPW 
from Excavation Fees to create four new DPW positions on 
an annual basis to enhance the services of the DPW Street 
Construction Coordination Center. For FY 2001-2002, such 
positions would represent 0.92 FTE and will be funded from 
April 1, 2002 through June 30, 2003. The details of the cost of 
the proposed four new positions is as follows: 

Cost of Four 

New 
Positions for 
FY 2001-2002 
from April 1. 
2002 through 
June 30. 2002 

0.46 FTE 6230 Street Inspectors $32,472 

$2,706 biweekly X 6 pay periods 
two 0.23 positions 

0.23 FTE 5362 Engineering Assistant I 10,068 

$1,678 biweekly X 6 pay periods 

0.23 FTE 1408 Principal Clerk 10,464 

$1,744 biweekly X 6 pay periods 

Total Salaries $53,004 

Fringe Benefits 13,251 

(25% of Salaries) 

Total Salaries and Fringe Benefits $66,255 

i 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

4 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

File 02-0134 



No. of 

FTE 

Positions 


Classification 


2.00 
1.00 


6230 
5362 


1.00 
4.00 


1408 



File 02-0134 is an amendment to the Annual Salary 
Ordinance for Fiscal Year 2001-2002 (Ordinance No. 171-01) 
that reflects the four new positions to be created in the DPW 
Street Construction Coordination Center as shown in the 
following Table: 

Step 1 Step 5 

(Biweekly- (Biweekly- 
Title Annual) Annual) 

Street Inspector 547,398 557,590 
Engineering 

Assistant I 543,628 552,968 

Principal Clerk 545,344 555,120 

The annual cost of the requested four positions would range 
from $229,710 at Step 1, including salaries of $183,768 and 
fringe benefits of $45,942, to $279,085 at Step 5, including 
salaries of $223,268 and fringe benefits of $55,817. 

Comments: 1. Attachment I is a memorandum provided by DPW which 

provides background related to the proposed legislation. 

2. Attachment II, provided by DPW, describes the general 
purpose of the legislation which is to fully recover costs of 
DPWs Street Construction Coordination Center activities as 
well as to' enhance coordination services pertaining to street 
excavations in the City. Attachment II shows for FY 2002- 
2003, DPW anticipates that costs would be fully covered if the 
proposed 196% increase in fee revenues is approved and the 
four additional positions are added based on revenues of and 
costs of $2,299,776. Attachment II also shows that DPW 
anticipates that a 135% increase in fee revenues would allow 
DPW to maintain the current level of service and fully recover 
its costs by increasing revenues from $776,648 to $1,826,820. 
Mr. Legg advises that if no fee increase is approved by the 
Board of Supervisors, DPW would reduce its current service 
level by eliminating five positions in order to have annual 
revenues equal annual costs without the need to use any 
balance in the Public Works Excavation Fund. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



3. Attachment III, provided by DPW, explains the specific 
responsibilities of each of the four proposed new positions. 
Attachment IV, provided by DPW, shows the current and 
proposed administrative/permit and inspection Excavation 
Fees as well as actual revenues from those fees for FY 2000- 
2001 and projected revenues based on DPW's recommended 
fee increases in FY 2002-2003, based on the addition of four 
new positions. 

4. Ms. Julia Friedlander of the City Attorney's Office advises 
that the proposed ordinance includes a provision that allows 
DPW to charge $2,000 for the issuance or renewal of a Utility 
Conditions Permit (UCP) under Section 11.9 of the 
Administrative Code. Ms. Friedlander explains that telephone 
companies are required to obtain a UCP from the City before 
such companies are allowed to excavate City streets. Ms. 
Friedlander advises that this fee will compensate DPW for 
the City Attornej^'s services related to such excavation 
permits. Ms. Friedlander further advises that the existing 
ordinance allows DPW to recover its costs for such permits, 
but the specific fee is not specified and no fee has ever been 
charged to recover the costs of the City Attorney's services. 
Ms. Friedlander advises the $2,000 amount is based on the 
City Attorney's calculation of the cost per UCP permit. As of 
the writing of this report, the City Attorney's Office has not 
provided the details for this $2,000 fee calculation. 

5. In accordance with the request of the Finance Committee, 
this legislation has been amended to increase the proposed 
fees in order for the City to recover Countywide costs as 
defined by the City and County's Cost Allocation Plan 
(COWCAP). Mr. Legg of DPW advises COWCAP costs are 
$193,082 or approximately 13% of direct salaries for the 14 
Street Construction Coordination Center positions. The 14 
positions include 10 existing positions and the four proposed 
positions. Mr. Legg advises that including COWCAP costs in 
the proposed fees will result in an increase of $193,082 or an 
approximately 9.2% increase in revenues from such fees over 
DPW's original proposed increase of $2,106,694, resulting in 
total annual revenues of $2,299,776. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

6 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Recommendation: The Budget Analyst normally recommends approval of 
increased fees if the purpose of such increases is to fully 
recover costs. However, the Budget Analyst considers 
approval of the proposed ordinances to be a policy matter for 
the Board of Supervisors because DPW is proposing fee 
increases which would not only recover existing costs but 
would also fund an expansion of services. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



City and County of San Francisco 




Willie Lewis Brown, Jr., Mayor 
Edwin M. Lee, Director 



(415)554-4830 

FAX (415) 554-7800 

ATTACHMENT I http://www.sfdpw.com 

Page 1 of 5 Department of Public Works 

Finance and Budget Division 
Financial Management and Administration 

City Hall, Room 348 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102-4645 



March 7, 2002 



Memorandum 



To: 



Harvey Rose 
Budget Analyst 



From: Douglas Legg 

Finance and Budget Division 

Re: Proposed Excavation Fee Increases (Revised) 

This memo has been revised to incorporate direction given by the Finance Committee on 
February 27; estimated revenues from DPW's proposed fee increase have been revised to 
reflect collection of Citywide overhead costs (COWCAP). This memo is in response to your 
request regarding the proposed fee increase and provides you with background information and 
an overview of the reasons for DPW's requested increase. 

Excavation Fee Modifications 

The current fee structure was adopted in 1992, prior to a significant increase in 
telecommunications-related excavations and a major capital improvement program by PG&E. 
The fee structure was amended in 1999, but overall fees were not increased at that time. In FY 
1992-1993, the number of blocks excavated totaled 5,092 but by FY 1997-1998, the total had 
reached 6,859. In FY 2000-2001, DPW issued 5,046 permits authorizing excavation of 9,168 
blocks of pavement. DPW anticipates that excavation in FY 2001-2002 will total 7,764 blocks 
and that during FY 2002-2003, approximately 7,964 blocks will be excavated. 

In addition to coordinating excavation work, the Street Construction Coordination Center 
(SCCC) provides a variety of administrative, education, outreach, regulatory and inspection 
services including: (a) preparation and distribution of a five-year plan identifying anticipated 
excavations (b) maintenance of a web site with information for the public including information 
about active permits, paving schedules, excavation plans and excavation moratorium data (c) 
inspections of excavations to ensure pavement smoothness, minimize traffic disruption and 
ensure compliance with Excavation Code (d) conducting administrative hearings (e) coordinating 
meetings between City departments and private firms regarding ongoing and proposed 
excavation projects (f) responding to complaints and service requests, including providing a five- 
day per week, 24 hour per day pager number for the public. 



"IMPROVING THE QUALITY OF LIFE IN SAN FRANCISCO' We are dedicated individuals committed to teamwork, customer 
service and continuous improvement in partnership with the community. 
Customer Service Teamwork Continuous Improvement 



ATTACHMENT 



Page 2 of 5 

At the end of Fiscal Year 1998-1999, DPW had a surplus in the Excavation Fund of SI, 008,205. 
This surplus developed because DPW was not fully staffed and thus did not have a full 
complement of budgeted inspectors, permit processors, and plan checkers charging to the 
Excavation Fund. In addition. DPW did not provide any significant public information services 
prior to the Excavation Code revision in 1999. DPW has funded the SCCC with this surplus 
since FY 1998-1999, which has steadily decreased. At the end of FY 2000-2001, the surplus was 
$235,020. The Excavation Fund balance history is as follows: 



Fiscal 

Year 


Beginning 
Balance Revenues' 


Ending 
Expenditures Balance 


1998-99 


SI. 809.197 | S597.124 


Sl.398,116 ! 51,008.205 


1999-00 1 1.008,205 | 769,997 


1,441,170 


337,032 


2000-01 j 337,032 | 991,568 ! 1,093,580 


235.020 



1- "Revenues" also includes fees for permit extensions, administrative penalties and excavators' deposits. The total 
collected for Inspection and Administrative Fees was S81 8,546 in FY 2000-2001 . For FY 2001-2002 and FY 
2002-2003, total revenue from Inspection and Administrative Fees are anticipated to be S 1,1 88,052 and S2, 299, 776 
respectively. 

When the Board of Supervisors approved the revision to the Excavation Code in 1998, DPW did 
not request a fee increase because of the available surplus. Now that the Excavation fund surplus 
has been expended, a fee increase is required to maintain the existing level of service. In 
addition, as described in the materials the Department submitted to the Board, DPW recommends 
increasing the existing level of service to provide better service. Based on the Department's - 
experience during the last three years, we have found that we underestimated the cost of 
implementing the Excavation Code as approved by the Board of Supervisors in 1998. 
Approximately 52,299,776 will be required in FY 2002-2003 to promptly process requests for 
excavation permits, inspect excavators' work, and properly coordinate excavations. Revenue 
collected from excavation Inspection and Administrative fees in FY 2000-2001 was S8 18,546 or 
$1,481,230 less than the $2,299,776 that DPW anticipates it needs in FY 2002-2003. 
Maintaining the existing service would require a 135% increase in revenues and providing 
DPW's recommended service level would require a 196% increase in revenues. DPW has based 
its FY 2002-2003 budget proposals on the proposed increase. 

The tables we submitted to the Board*of Supervisors with the proposed legislation show: (1) that 
DPW's proposed service level and the addition of four new positions (4.0 FTEs for a full fiscal 
year and 0.92 FTEs for the remainder of FY 2001-2002) would require a 196% increase in 
revenues from excavations (2) that maintaining the existing level of service would require a 
i35% increase in revenues and (3) DPW advises that no fee increase would result in a reduced 
service level through the elimination of five positions (5.0 FTEs in a full fiscal year). The tables 
also detail the specific positions that would be added, maintained, or eliminated under each of the 
above scenarios, the proposed fee modifications for various levels of service and the impact on 
specific services of differing fees. 

The proposed fee structure differs from the existing fee structure in two key ways: (a) the new 
fee structure recognizes that larger excavation projects cost the City more to inspect and 
administer per square foot of excavation than smaller projects and therefore classifies excavation 
projects as "small," "medium," and "large" and (b) charges for inspection fees will be based on 
the duration of an excavation project rather than the square footage. Small projects would be 
those that are 100 square feet or less, medium projects would be those that are greater than 100 
and no greater than 1,000 square feet and large projects would be those greater than 1,000 square 
feet. 



ATTACHMENT I 

The average "small" excavation project is 15 square feet and lasts 14 days. Examples of small 
projects include the many gas and water hook-ups installed or replaced throughout the City. The 
average "medium" excavation project is 187 square feet and lasts 25 days. Two recent examples 
of medium-sized projects include: (a) the relocation of multiple telecom conduits on 4 th Street 
between Townsend and Berry and (b) an emergency sewer repair of about 150 square feet at the 
intersection of Mission and Beale Streets. The average "large" excavation project is 3,334 square 
feet and lasts 19 days. Two recent examples of large-sized projects include: (a) the installation of 
multiple telecom conduits on Kearny Street from Market to Pine Streets and on Mission Street 
from Stuart to 1 1 th Streets and (b) the replacement of gas mains by Pacific Gas & Electric on 
Geary Boulevard between 38 th and 45 th Avenues and on 3 rd Street between Palou and Hudson 
Avenues. 

We performed analysis, summarized in Tables 5 and 6 that were submitted to the Board of 
Supervisors, to determine the cost of administering and inspecting the different sizes of 
excavation permits. The tables show that small excavation projects have few administrative 
costs beyond those for permit review inspection and that a fixed fee of $66 for 
Administrative/Permit costs per permit and $16 per permit for Inspection Fees reflects the cost of 
small permits. As projects get larger in scope, the costs to the City for public information, 
response to calls and complaints, printing, billing, and general administration, increase. 
Therefore, it makes sense to continue charging Administrative/Permit Fees based on a per block 
charge. The problem with the current fee structure is that for Inspection Fees, it does not account 
for the duration of a project. There is a correlation between the duration of an excavation project 
and: (1) the number of hours required for DP W to analyze opportunities for joint excavations (in 
which two or more companies perform excavations simultaneously) (2) attending coordination 
meetings and (3) the number of hours of inspection required during an excavation. Therefore, 
DP W is recommending basing Inspection Fees on the duration of an excavation project. The 
salaries used in calculating costs, include mandatory fringe benefits as well as DPW's overhead 
based on DPW's Indirect Cost Plan. City-wide indirect costs are now included in DPW's 
estimation of total costs. 

The tables below show the fees collected under the existing fee structure for hypothetical average 
small, medium, or large projects compared with the fees that would be collected under the 
proposed fee structure. * 



Administrative Fees 





Based on 


Average-Sized Projects 


Project Size 


Existing Fee 
Structure 


Proposed Fee 
Structure 


% Difference 


Small 


$26.03 


$ 66.00 


154% 


Medium 


75.64 


251.12 


232% 


Large 


342.77 


1.508.20 


340% 




I 

Based on 


nspection Fees 
Average-Sized Proje( 


:ts 


Project Size 


Existing Fee 
Structure 


Proposed Fee 
Structure 


Difference 


Small 


$11.89 


$ 16.00 


35% 


Medium 


$149.56 


1.386.21 


827% 


Large 


$2,667.55 


5,174.21 


94% 



10 



ATTACHMENT I 
Other Code Modifications Page 4 of 5 

The proposed legislation includes a number of other proposed modifications to the Excavation 
Code. These include: 

• The proposed ordinance adds a provision to the section that provides for notification of 
responsible parties of violations of the code. The proposed addition requires the Director 
of DPW to send written, electronic, or fax notification to violators of the Excavation 
Code regarding the violation and the manner in which it should be remedied. It would 
also allow the Director of DPW to adopt additional procedures with regard to 
implementing administrative penalties. Existing code does not specify the manner in 
which notification is to be transmitted, and does not specify that the Director must specify 
the manner in which the violation should be remedied. 

• The proposed ordinance would allow recipients of excavation permits to request a refund 
of an inspection fee if an excavation project is completed prior to the permit expiration 
date. Such a refund would be proportionate to the number of days that a project was 
completed early and would require verification that the project was completed early, that 
all work has been satisfactorily completed, and that there are no outstanding fines or 
penalties pending against the permittee. The proposed ordinance would allow DPW to 
charge SI 10 for the actual cost to the Department of verifying, calculating and processing 
the refund. Existing law does not provide for refunds because there are no fees currently 
based on project duration. Under the proposed fee structure, the duration of a project 
would be estimated at the time of the application but it is not fixed. Refunds are for 
finishing a project early. DPW anticipates that some excavators may, reasonably, want 
refunds if their project is completed in less time than was estimated when they submitted 
meir application. There are no refunds for administrative fees because these fees pay for 
fixed costs of administering the code and reviewing applications and are not dependent 
on the length of projects. 

• The proposed ordinance would require that, before any modifications can be made to a 
permit, DPW would have to approve any such modifications and that the terms and 
conditions of the permit should include the permit application and all information 
submitted with it, all Department orders and regulations applicable to it. Applicants for 
permit modifications will be subject to administrative fees This permit modification 
language was added to encourage applicants to plan and schedule their projects more 
realistically and to recover the Department's additional costs for review and approval. 
The volume of permit modifications and extensions has grown significantly in recent 
years. In FY 1999-2000, 16% of all permit reviews and approvals were for extensions and 
modifications. In FY 2000-2001, 33% of all permit reviews and approvals were for 
extensions and modifications. 

• The proposed ordinance would require written explanation of requests to postpone the 
permitted start date of an excavation project or to extend the duration of a project in 
progress. The proposed ordinance would require such a written explanation to specify the 
additional number of days needed for the project and for the request to be accompanied 
by the applicable fees. The proposed ordinance would also require that the request be 
submitted at least five days prior to the proposed excavation start date or the permit 
expiration date. The proposed ordinance would allow the Director of DPW to require the 
permittee to meet special conditions related to such extensions. The Director of DPW 
would be prohibited from allowing postponements of the start date after the permitted 

11 



ATTACHMENT I 

Page 5 of 5 
start date and from allowing extensions to the duration of an excavation project after the 
permit expiration date. The proposed ordinance would add more specificity to the 
processes for requesting a modification of the start date of excavation work or duration of 
the work. These changes are proposed because to promote better planning and 
coordination of excavation projects. 

The proposed ordinance would allow the Director of DP W, at his or her sole discretion 
and upon written request from the permittee, to amend permits for the purpose of: (a) 
changing the method of construction (b) advancing the start date of excavation or (c) 
modifying permit conditions. The proposed ordinance requires that such requests include 
a written explanation for the proposed amendment and that such proposals be 
accompanied by the applicable fees. In granting such an amendment, the Director may 
require the permittee to comply with special conditions as determined by the Director. 
The proposed ordinance would prohibit the Director from granting requests for 
amendments to the excavation after the permit expiration date. 

Existing law (Section 2.4.43 of the Excavation Code) authorizes the Director of DPW to 
require an applicant or permittee to pay any sum in excess of the amounts charged in 
instances in which administration or inspection of an excavation will be unusually costly 
to the Department. The Department does not currently collect fees for other types of 
permit amendments because the Department has not previously been granted specific 
authorization by the Board of Supervisors to do so. The proposed ordinance would 
authorize the Department to collect such fees for these amendments, such as changing the 
method of construction from that specified in the original permit application. 

The proposed ordinance will allow either the owner or the owner's agent to be the 
permittee on a project and require that both the owner and agent comply with liability and 
indemnity requirements and that either the owner or agent comply with insurance 
provisions to protect the City. Owners would also be required to comply with taxable 
possessory interest provisions. The City Attorney wants to make sure that we can hold 
everyone responsible for the work of the subcontractors. The owner is not always the 
permittee, so we propose adding language so the code will say the owner, permittee or 
agent are responsible. * 

The proposed ordinance would define "willful noncompliance" to include deliberate acts 
that result in failure to: (a) satisfy any terms and conditions of the Excavation Code or 
any requirements of DPW (b) pay any outstanding assessments, fees, penalties as 
determined by the City or a court. 

The proposed ordinance would require a report by the Director of DPW to the Board of 
Supervisors within one year after the approval of the proposed ordinance and every three 
years thereafter. Such reports would provide recommendations, if appropriate, regarding 
adjustments to inspection and administrative fees related to excavations to ensure that the 
City recovers its costs related to inspecting and administering excavation projects. The 
first report to the Board of Supervisors regarding the proposed changes in the Inspection 
and Administrative Fees for excavations would be due one year after the Mayor signs the 
proposed ordinance. We anticipate that this would be in March or April of 2003. 



12 



City and County of San Francisco 




ATTACHMENT II 



Willie Lewis Brown, Jr., Mayor 
Edwin M. Lee, Director 



(415)554-4830 

FAX (415) 554-7800 

http://www.sfdpw.com 

Department of Public Works 

Finance and Budget Division 

Financial Management and Administration 

City Hall, Room 348 

1 Dr. Carlton B. Goodlert Place 

San Francisco, CA 94102-4645 



March 7, 2002 



Memorandum 



To: 



Harvey Rose 
Budget Analyst 



From: Douglas Legg 

Finance and Budget Division 

Re: Proposed Excavation Fee Increases 



This memo has been revised to incorporate direction given by the Finance Committee on February 27; 
estimated revenues from DPW's proposed fee increase have been revised to reflect collection of the Citywide 
overhead costs (COWCAP). This is in response to your request for information regarding DPW's recommended 
fee increase. 

The general purpose of the legislation is to restructure the basis upon which Inspection and Administrative fees for 
excavations are charged. Such changes will more closely correlate the fees charged to the actual cost of providing 
the services. Our recommended increase will allow us to fully recover our costs for providing the services. It will 
also allow us to add four additional positions so that we can provide services in a more timely manner. 

The following tables present the various staffing and fee scenarios: 

Revenues and Expenditures Without Recommended 196% Fee Increase But With Addition of Four New 

Positions 



Anticipated FY 2002-2003 Revenues Without Recommended Fee Increase 


$776,648 


Anticipated FY 2002-2003 Expenditures With Addition of Four New Positions 


$2,299,776 


Difference (Shortfall) 


($1,523,128) 



Revenues and Expenditures Wilh Recommended 196% Fee Increase And WjJii Addition of Four New Positions 



Anticipated FY 2002-2003 Revenues With Recommended Fee Increase 


$2,299,776 


Anticipated FY 2002-2003 Expenditures With Addition of Four New Positions 


$2,299,776 


Difference (Shortfall) 


$0 



Revenues and Expenditures With a 135% Fee Increase to Maintain Current Service Level And No Change in Existing 

Positions 



Anticipated FY 2002-2003 Revenues With A Fee Increase to Maintain Current Service Level 


S1.S26.S20 


Anticipated FY 2002-2003 Expenditures With No Change in Existing Positions 


S1.S26.S20 


Difference (Shortfall) 


SO 



"IMPROVING THE QUALITY OF LIFE IN SAN FRANCISCO" We are dedicated individuals committed to teamwork, customer 
service and continuous improvement in partnership with the community. 
Customer Service Teamwork Continuous Improvement 

13 



City and County of San Francisco 




Willie Lewis Brown, Jr., Mayor 
Edwin M. Lee, Director 



(415)554-4830 
ATTACHMENT III FAX (415) 554-7800 

http://www.sfdpw.com 

Page 1 of 5 Department of Public Works 

Finance and Budget Division 
Financial Management and Administration 

City Hall, Room 348 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102-4645 



Memorandum 



March 7, 2002 

To: Harvey Rose 

Budget Analyst 

From: Douglas Legg 

Finance and Budget Division 

Re: Proposed Excavation Fee Increases 



This is in response to your request for information regarding the four requested new positions 
(4.0 FTEs on an annualized basis and 0.92 FTEs for the remainder of FY 2001-2002). The 
budgeted funds for these proposed positions assume an April 1, 2002 start date. Such positions 
are as follows: 

(1) 6230 Street Inspectors- We propose adding 2.0 FTEs on an annualized basis (0.46 FTE for 
the remainder of FY 2001-2002). These positions will allow us to inspect all medium and large 
excavation projects once ever four days and every two days, respectively to enforce the 
Excavation Code, guarantee pavement smoothness, minimal traffic interruption and ensure that 
work is conducted according to adopted construction standards. Specifically, each position would 
perform the following work: inspections of excavation sites throughout the City. Without these 
positions, inspections will take place once every nine days (medium) and four days (large) which 
we do not believe is adequate to enforce the Excavation Code or to minimize the impact of 
Excavations on the public. 



(2) 5362 Engineering Assistant I- We propose adding a 1 .0 FTE Engineering Assistant I on an 
annualized basis (0.23 FTE for the remainder of FY 2001-2002). This position will allow us to 
process permits in a much more timely manner. This position would perform the following work: 
process excavation permits, review and plan check engineering drawings submitted with permit 
applications; provide information and education to excavators on Excavation Code requirements. 

(3) 1408 Principal Clerk- We propose adding a 1.0 FTE Principal Clerk on an annualized basis 
(0.23 for the remainder of FY 2001-2002). This position will process billings, produce annual 
reports, and update public information on the SCCC's web site. Higher paid Engineering 
Associates and an Engineering Assistant currently do billing. The addition of the Principal Clerk 

IMPROVING THE QUALITY OF LIFE IN SAN FRANCISCO' We are dedicated individuals committed to teamwork, customer 
service and continuous improvement in partnership with the community. 
Customer Service Teamwork Continuous Improvement 

14 



ATTACHMENT III 
Page 2 of. 5 
will allow these people to process permit applications in a much more timely manner, as was 

shown in Table 1 of our original submittal to the Board of Supervisors. This position would 
perform the following work: take complaints and requests for action on the telephone and ensure 
that action has been taken, send out bills to permittees and permittees who have been given 
Notices of Violation, maintain billing records perform administrative work required to produce 
annual reports, meeting mailing lists, maintain information on Excavators to ensure they meet 
administrative requirements of the Excavation Code, update data on the SCCC's web site. 

Detailed job descriptions are attached to this memorandum. 

By adding these four positions, the Street Construction Coordination Center will be able to 
provide the service that was envisioned when the revision to the Excavation Code was adopted in 
1998. All medium and large excavations will be inspected often enough that the City will be able 
to identify and correct violations to the Code, which include poor repaving, excavations that are 
performed so as to damage or threaten City infrastructure like water lines, or excavations outside 
of permitted hours. In addition, permits for excavations will be processed on a much more timely 
basis. As shown on the previously referenced Table 1, we will be able to process between 60- 
70% of our medium and large excavation permits within 10-15 days. Without the additional 
staff, we will only be able to process 10-15% of these permits in that amount of time. Finally, we 
will improve the efficiency of our revenue recovery through more frequent billings. 

We believe that all four of these positions are necessary to meet the increased demand for 
excavation services that has occurred in recent years and that we anticipate during the next five 
years, as well as the expectation of the Board of Supervisors and the public for better 
enforcement of the Code. 

While the level of excavation will not be as high in FY 2002-03 as it was in FY 2000-01 , we 
have based our proposed staffing request on an analysis of the number of staff hours it will 
require to provide services promised when the Excavation Code was revised. It is true that in FY 
2000-2001, 9,168 blocks of pavement were excavated and in FY 2001-2002, we anticipate 7,764 
blocks will be excavated. The number will grow again in FY 2002-2003, when we anticipate that 
7,964 blocks will be excavated. We would like to point out that while there was a decrease in 
excavation activity from FY 2000-2001 to FY 2002-2003, FY 2000-2001 was a year in which 
excavation activity greatly exceeded that of a typical year. With the existing staff levels, we were 
unable provide timely service given this level of activity. Even though we do not anticipate a 
return to the extremely high level of excavation activity experienced during the boom year FY 
2000-01 we would not be able to provide comprehensive or timely services with our existing 
staffing levels for the levels of activity that we do anticipate. 

In summary, the services that we would be able to provide in a more comprehensive and timely 

manner if we add the proposed positions include the following: 

-adequate number of inspections of medium and large excavation projects 

-processing permit requests 

-responding to complaints 

-responding to Code variance requests 

-processing requests for extensions 

-providing information to the public regarding excavation projects 

-more frequent billing for permits 

-more frequent sending of notices of violations 

-more frequent collections follow-up 

-more frequent performance and budget reporting 

-earlier implementation of proposed system improvements (permits online, web site 

improvements) -, c 



ATTACHMENT III 

Page 3 of 5 
As shown in our submittals, increased revenues based on our recommended fee increase would 
be necessary to fund these four proposed new positions. 



16 



Detailed Job Descriptions ATTACHMENT III 

[5362] Pa § e 4 of 5 

Duties and Responsibilities/Performance Criteria 

• Processes and approves utility excavation permits manually and through electronic permitting: 

• Reviews and plan checks engineering drawings for approval of utility excavation permits for 
compliance with the Public Works Code and other Department regulations and policies; 

• Coordinates with utility company representatives regarding construction conflicts, street-use 
regulations and street status and discuss issues with contractors and sub-contractors regarding 
permits and special condition to the permits; 

• Assists in reviewing and entering large major projects(projects lasting from 15 days or more 
calendar days); 

• Creates macros that generate reports and updates information on the weekly construction report; 

• Informs and trains utility company representatives on the electronic permitting application 
process, approval procedure and code requirements through SCCC monthly workshops; 

• Contacts and negotiates with utility company representatives and developers regarding 
construction and street-use regulations, trench excavations and special paving requirements for 
newly paved streets; 

• Creates reports and produces maps of active permits to overlook current projects and maps to be 
used for planning and neighborhood meetings; 

• Creates fiscal year summary reports. 

[1408] 

Duties and Responsibilities/Performance Criteria 

3 

A. Telephones - routing and intake of calls, logging and follow-up for requests for action. 

a. Enters request for action in Access database. Research complaints on follow-up 
calls. 

b. Answer inquiries of other departments related to office activities and assists in 
resolving a wide variety of problems and complaints. 

c. Front office assistance to customers. 

d. General administrative support - copies, typing, faxing mailings, file 
maintenance, scheduling meetings and appointments, ordering of supplies for 
offices. 

B. Maintain information of all utilities working in the Public Right-nf-Way to ensure each 
has proper and current documents, including a UCP (Utility Conditions Permit). 
Franchise agreement, insurance, business tax certification and to notify the utility when 
they are out of compliance. The database for tracking information is Access. The 
database includes the Type of agreement; Expiration dates for UCP; Expiration dates for 
Insurance; Expiration dates for Tax Registration; Facility; Plan; Security Deposit and 
Business. 

17 



ATTACHMENT III 

Page 5 of 5 

C. Involved with review of documents for insurance and surety bond deposits, with as- 
needed assistance from Keith Grand, Risk Manager for inquires requiring special 
attention. 

D. Participate in the preparation and maintenance of a variety of special records and reports; 
5 Year Plan; as-needed reports by the manager; maintaining Special Traffic Permits 
(active and inactive files), and Caltrans Encroachment Permits. 

E. Exercising individual judgment and knowledge of applicable laws, regulations and 
procedures concerning requests for action for inspectors' attention and responsibility. 

F. Maintain mail lists for notification of meeting agendas and minutes. 

G. Maintain billing and collection records for utility excavation permits, Notices of 
Violations, and Special Inspections. Send out invoices and collect monies due. 



[6230] 

Duties and Responsibilities/Performance Criteria 

Under direction, is responsible for: 

Inspecting sidewalks, roadways, and utility trenches for conformance to City regulations. 

Investigating citizen, interdepartmental, and claim-related complaints pertaining to the 
conditions or uses of sidewalks, roadways, or any structures of, on, or in the City's and 
pedestrian's right-of-way. 

Initiating corrective action of 100% of complaints within 24 hours. 

Notifying responsible parties to render corrective action when and where required. 

Conducting follow-up inspections and re-notifications to insure compliance to repair 
notices and citations. a 

Conducting on-site meetings/off-site contacts with citizens, interdepartmental personnel, 
and contractors. 

Assisting in conduction neighborhood informational meetings, district sweeps and 
inspections for compliance to City right-of-way and quality-of-life issues. 

Other related duties as assigned. 

Conducting Pre construction meetings and final walk through with permittee and 
permittee's contractor. 



18 



















01 


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o 




a 




<~j 


~- 


s 




= 


^ 


= 


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3 N U 



&o ^2 &^ to ^£ u 
» U Jj * 1) J 
o '5* « u "o" o g"1 

"o" £« 'p -r 



S. f. — 



ATTACHMENT IV 



_ 3 •- 

■? '-5 E 



K 



19 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Item 4 - File 02-0059 

Note: This item was continued by the Finance Committee at its meeting of 
February 27, 2002. 



Department: 

Amount: 
Source of Funds: 
Item: 



Description: 



Department of Human Resources (DHR) 

$8,901,795 

FY 2001-2002 budget of 36 City Departments 

Hearing to consider release of reserved funds in various 
City Departments (Fiscal Year 2001-2002 budget), in the 
amount of $8,901,795 representing 3 Vi months of 
Salaries and Fringe Benefits for 242.6 FTE Special 
Assistant Positions. 

In the FY 2001-2002 budget, the Board of Supervisors 
appropriated and placed on reserve $15,260,220 for 
salaries and fringe benefits for 242.6 FTE Special 
Assistant positions that were to be reclassified under the 
Citywide Management Classification and Compensation 
Plan. The amount of $15,260,220 represents 50 percent, 
or six months, of the Salaries and Fringe Benefits for 
242.6 FTE Special Assistant positions represented by the 
Municipal Executives Association (ME A) 

At the Finance Committee meeting of December 12, 2001 
(File 01-1818), the Committee released one month of the 
six months reserve or $2,543,370 for Salaries and Fringe 
Beneffts related to these positions. Subsequently, at the 
Finance Committee meeting of January 30, 2002 (File 02- 
0059), the Committee released the second month of the 
six months reserve or $2,543,370 for Salaries and Fringe 
Benefits related to these positions. 

Finally, at the February 27, 2001 meeting of the Finance 
Committee, the Committee released $1,271,685, 
representing two additional weeks of the six months 
reserve for Salaries and Fringe Benefits, resulting in a 
remaining reserve of $8,901,795. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

20 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Comment: This item is related to Item 5 - File 02-0125 in this report 

to the Finance Committee concerning the requested 
release of $237,002 representing 3 Vi months of Salaries 
and Fringe Benefits reserved for 12 Treasure Island 
Development Authority Special Assistant positions. 

Recommendation: Approval of the requested release of reserved funds is a 

policy decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

21 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Item 5 - File 02-0125 

Note: This item was continued by the Finance Committee at its meeting of 
February 27, 2002. 



Department: 

Amount: 
Source of Funds: 

Item: 



Description: 



Business and Economic Development, Treasure Island 
Development Authority (TIDA) 

$237,002 

FY 2001-2002 budget of the Treasure Island Development 
Authority 

Hearing to consider release of reserved funds, Treasure 
Island Development Authority (Fiscal Year 2001-2002 
budget), in the amount of $237,002 representing 3 l A 
months of Salaries and Fringe Benefits for 12 Treasure 
Island Special Assistant positions. 

In the FY 2001-2002 budget, the Board of Supervisors 
appropriated and placed on reserve $406,290 for salaries 
and fringe benefits for Treasure Island. The amount of 
$406,290 represents 50 percent, or six months, of the 
Treasure Island Development Authority's Salaries and 
Fringe Benefits for 12 Special Assistant positions. At the 
Finance Committee meeting of December 19, 2001 (File 
01-2183), the Finance Committee released one month of 
the six months reserve or $67,715 for Salaries and Fringe 
Benefits related to these twelve positions. Subsequently, 
at the, Finance Committee meeting of February 6, 2002 
(File 02-0125), the Finance Committee released the 
second month of the six months reserve or $67,715 for 
Salaries and Fringe Benefits related to these twelve 
positions. 

Finally, at the February 27, 2001 meeting of the Finance 
Committee, the Committee released $33,858, 
representing two additional weeks of the six months 
reserve for Salaries and Fringe Benefits, resulting in a 
remaining reserve of $237,002. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

22 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Comment: This item is related to Item 4 - File 02-0059 in this report 

to the Finance Committee concerning the requested 
release of $8,901,795 in reserved funds representing 3 V2 
months of Salaries and Fringe Benefits reserved for 242.6 
FTE Special Assistant positions in 36 City Departments 
with respect to the City-wide Management Classification 
and Compensation Plan. 

Recommendation: Approval of the requested release of reserved funds is a 

policy decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

23 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Item 7 - File 02-0244 



Department: 
Item: 



Port of San Francisco 

Resolution approving a new lease agreement 
between the City and County of San Francisco 
operating by and through the San Francisco Port 
Commission and Breda Transportation, Inc. for 
shed space, loading dock space and office space at 
Pier 80. 



Location: 



Pier 80 



Purpose of Lease: 



To provide Breda Transportation, Inc. with shed 
space to assemble and retrofit light rail vehicles 
(LRVs), loading dock space to transfer the parts 
and materials needed to assemble and retrofit 
LRVs and office space for administrative support of 
the LRV work. 



Lessor: 



Port 



Lessee: 

No. ofSq. Ft. and 
Monthly Rental Rate 
charged to Breda: 



Breda Transportation, Inc. (Breda) 



169,620 sq. ft of shed space (Shed D) 
4,850 sq. ft of loading dock space 
1,700 sq. ft of office space 

176,170 Totals 



Rent per square 

foot per month 

$0.38 

0.20 

1.00 



Monthly 

Rent 

$64,455 

970 

1.700 

$67,125 



be $67,125 from the 
this proposed lease, 
upon approval of the 
Board of Supervisors, 
Beginning January 1, 



The monthly rent would 
commencement date of 
anticipated to commence 
subject resolution by the 
until December 31, 2002. 
2003, the monthly rent will increase by $5,090 from 
$67,125 to $72,215 due to an increase of $0.03 or an 
increase of 7.9 percent, in the monthly rental rate 
per square foot for Shed D from $0.38 to $0.41 per 
square foot per month. The monthly rental rate 
per square foot for the loading dock space and the 
office space would not change (see Comment No. 6). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

Ik 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Utilities and 

Janitorial Service: According to the terms of this proposed lease, 

Breda is required to pay for utilities and janitorial 

services. 



Term of Lease: 



Right of Renewal: 



Description: 



Comments: 



March 1, 2002 to June 30, 2003 (16 months) (see 
Comment No. 2). 

One, 18-month option to extend the term of this 
proposed lease agreement beginning on July 1, 
2003, at a rate of $79,000 per month. 

The proposed resolution would authorize a new 16- 
month lease with one 18-month option to extend 
the term of the lease, of 176,170 square feet of 
space at Pier 80, which is under the jurisdiction of 
the Port, to provide Breda with shed space, dock 
space and office space. 

1. Attachment I is a memorandum from Mr. Phil 
Williamson of the Port which advises that the 
existing five-year lease agreement between Breda 
and the Port expired on February 28, 2002. Mr. 
Williamson advises that Breda currently assembles 
and retrofits Light Rail Vehicles (LRV) for the 
Municipal Railway (MUNI) at Pier 80. According 
to Mr. Williamson, the existing lease agreement is 
for 164,397 square feet of shed space and 1,700 
square feet of office space for a total of 166,097 
square feet. Mr. Williamson states that the 
existing lease did not provide for loading dock space 
because Breda believed that it would be able to 
transfer parts and materials to assemble and 
retrofit the LRVs through the shed space doors. 
However, based on an inquiry from the Budget 
Analyst, Mr. Williamson acknowledged that Breda 
has used the loading dock space at Pier 80 
intermittently over the past five years to transfer 
parts and materials but that the Port has not 
charged any rent to Breda for such loading dock 
space. The Budget Analyst questions why the Port 
did not charge any rent to Breda for such loading 
dock space. Under the terms of the proposed lease, 
Breda would be charged a rental rate of $0.20 per 
square foot per month for loading dock space. The 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



25 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Budget Analyst estimates that if this rate of $0.20 
per square foot per month had been charged for the 
4,850 square feet of loading dock space over the 
past five years, the Port would have collected an 
additional $58,200 ($0.20 x 4,850 x 60 months) of 
revenue. Mr. Williamson advises that the Port 
would not attempt to collect any back rent for the 
prior intermittent use of the loading dock space and 
the Port is satisfied with the terms of the proposed 
lease with respect to the rental rate for the subject 
loading dock space. 

According to Mr. Williamson, the monthly rent 
payable by Breda to the Port under the existing 
lease agreement as of February 28, 2002, was 
$46,520 based on a monthly rental rate of 
approximately $0.28 per square foot for the 166,097 
square feet of shed and office space (see Comment 
No. 3 below). 

Under the proposed new lease agreement, Breda 
will lease 169,620 square feet of shed space, an 
increase of 5,223 square feet or 3.2 percent, 1,700 
square feet of office space, the same amount as 
under the existing lease, and new space of 4,850 
square feet for loading dock space, for a total of 
176,170 square feet as compared to 166,097 square 
feet under the existing lease. Therefore, the 
proposed new lease includes a total of 10,073 
additional square feet (5,223 additional square feet 
of shed space and 4,850 of loading dock space). Mr. 
Williamson advises that Breda has requested a new 
lease in order to fulfill contract obligations with 
MUNI to assemble 22 Breda LRVs which are 
anticipated to be completed in October of 2002 and 
the on-going retrofit of 51 Breda LRVs which are 
anticipated to be completed in May of 2003. 
Additionally, as stated in Attachment I, Breda also 
anticipates using the space for other work for 
MUNI and potentially for assembling and/or 
repairing vehicles for other transit agencies. 

2. Mr. Williamson advises in Attachment I that 
the Port had planned on submitting this proposed 
resolution for the subject lease agreement to the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

26 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



Board of Supervisors prior to March 1, 2002, when 
it was anticipated that the subject new lease would 
begin. However, according to Mr. Williamson, 
Breda informed the Port that negotiations with one 
of its unions, the International Brotherhood of 
Electrical Workers (IBEW), was likely to result in a 
labor strike at Breda's Pier 80 premises and the 
Port decided to wait for the resolution of this labor 
dispute before submitting this proposed lease to the 
Board of Supervisors. Mr. Williamson further 
advises that the labor dispute has since been 
successfully resolved and the IBEW and Breda 
have signed a new labor agreement. According to 
Mr. Williamson, the subject proposed lease 
agreement would begin when the proposed lease 
agreement is approved by the Board of Supervisors. 

3. As noted above, the existing lease agreement 
with Breda expired on February 28, 2002. Mr. 
Williamson states in Attachment I that the terms 
of the existing lease agreement contained a 
holdover provision that allowed Breda to continue 
the use of the property on a month-to-month 
holdover basis for the 166,097 square feet of shed 
and office space at an increase in the monthly rent 
of $7,480, effective March 1, 2002, or an increase of 
approximately 16.1 percent from $46,520 to 
$54,000 until the proposed new lease agreement is 
approyed by the Board of Supervisors. Upon 
approval of the proposed new lease, the new 
monthly rent will be $67,125, an increase of 
$13,125. However, the Budget Analyst notes that 
the new monthly rent of $67,125 is for a total of 
176,170 square feet (169,620 square feet of shed 
space, 4,850 square feet of loading dock space and 
1,700 square feet of office space), which is 10,073 
square feet more than the existing lease agreement 
for 166,097 square feet of space. The average 
monthly rental rate under the existing month-to- 
month holdover lease is approximately $0.33 per 
square foot ($54,000/166,097 square feet), which 
would increase to approximately $0.38 per square 
foot ($67,125/176,170 square feet), or an increase of 
$0.05 per square foot or approximately 15.2 
percent. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



11 
27 



27 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



4. Attachment II, provided by Mr. Williamson, 
compares the monthly rental rate for the shed 
space, loading dock space and office space as of 
February 28, 2002, when the existing lease expired, 
the current rent, the proposed rent and the related 
percentage increases in rent by the type of space. 

5. The proposed lease states that the maintenance 
and repair of the subject premises would be the sole 
responsibility of the lessee with the exception of 
maintaining a watertight condition for the roof and 
the exterior walls of the shed, which will be done by 
the Port. Mr. Williamson advises that given the 
current good condition of the roof and exterior 
walls, the maintenance and repair costs associated 
with the roof and the exterior walls of the shed 
should be insignificant for the Port over the term of 
the proposed lease. 

6. Mr. Williamson advises in Attachment I that the 
proposed monthly rental rate for the shed space 
increases over the term of the proposed lease, 
including the 18-month option, from an initial rate 
of $0.38 per square foot per month to a final rate of 
$0.51 per square foot for an average of $0.44 per 
square foot over the term of the proposed lease 
agreement. According to Mr. Williamson, 
negotiations between the Port and Breda resulted 
in the monthly rental rate of $0.20 per square foot 
for the 4,850 square foot of loading dock space and 
in the monthly rental rate of $1.00 per square foot 
for the 1,700 square feet of office space. Based on 
negotiations, these rates to be charged to Breda 
would not increase over the 16-month term of the 
proposed new lease agreement and the 18-month 
option period. 

7. The Budget Analyst notes that the proposed 
lease agreement with Breda, includes an initial 
rental rate for the shed space which is $0.38 per 
square foot. This is $0.07 or 15.6 percent below the 
Port Commission's existing approved leasing 
parameters of $0.45 per square foot, as noted in 
Attachment I. However, Mr. Williamson advises in 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

28 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Attachment I that the proposed average monthly 
rental rate over the life of the 16-month lease, plus 
the 18-month option period is SO. 44 per square foot 
for shed space, or only $0.01 below the Port 
Commission's approved leasing parameter of $0.45 
per square foot. Furthermore, Mr. Williamson 
advises that the Port Commission has approved 
this subject proposed lease which was a result of 
negotiations between the Port and Breda. 

8. Although, Mr. Williamson advises that the 
proposed rental rates represent current fair market 
value, the Budget Analyst notes the following: (a) 
this subject lease is initially proposed to be $0.38 
per square foot for shed space, which is 15.6 
percent or $0.07 below the Port Commission's 
existing approved leasing parameters of $0.45 per 
square foot; (b) the average rate of $0.44 per square 
foot over the life of the proposed 16-month lease 
and 18-month option period is $0.01 below the Port 
Commission's existing approved leasing parameters 
of $0.45 per square foot; (c) Breda has used the 
loading dock space intermittently for the past five 
years with no rent being charged by the Port to 
Breda and the Port would not recover any back rent 
for prior use of the loading dock space; (d) rental 
rates for the loading dock space and the office space 
do not increase over the 16-month term of the 
proposed new lease agreement and the 18-month 
option period and, (e) Breda also anticipates 
potentially using the space for assembling and/or 
repairing vehicles for other transit agencies besides 
the Municipal Railway. 

Therefore, the Budget Analyst considers the 
approval of the proposed resolution to be a policy 
matter for the Board of Supervisors. 

Recommendation: Approval of the proposed resolution is a policy 

matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

29 



Attachment I 
Page 1 of 2 



PORT OF SAN FRANCISCO 
MEMORANDUM 

DATE: March 7, 2002 

TO: Maureen Singleton, Budget Analysts Office, Board of Supervisors 

FROM: Phil Williamson 

RE: File No. 02-0244; Proposed Lease to Breda Transportation, Inc. 



This memorandum is in response to your request for additional information about the 
lease of Pier 80, Shed D to Breda Transportation, Inc. ("Breda"). 

The Port currently leases the Pier 80, Shed D facility to Breda under the terms of a 5 year 
lease that terminated on 2/28/02. The leased premises are used by Breda to assemble and 
retrofit light rail vehicles according to a separate contract between Muni and Breda. 
Breda has requested a new 16 month lease of the premises in order to fulfill contract 
obligations to Muni and potentially attract new work from Muni or other transit agencies 
seeking to assemble and/or repair light rail vehicles. 

The existing lease contains a "holdover" provision allowing the tenant to continue use of 
the property on a month-to-month basis provided the Port has not otherwise decided to 
vacate the premises. In the holdover period either party may terminate the lease by 
providing a thirty-day written notice to the other party. Per the lease, rent during any 
holdover period increases from the existing rate of S46,520 to $54,000 per month (a 16% 
increase). The proposed lease has an initial rental rate of 567,125 per month (a 44% 
increase over the existing rate) commencing upon lease execution, with a programmed 
rent increase to $72,215 per month on January 1, 2003. Should Breda exercise an 18- 
month option to extend the lease on July 1, 2003, the rate again increases to $79,000 per 
month and on January 1, 2004, the rate increases to $89,175 per month. 

The premises of the proposed lease include 169,620 square feet ("s.f") of shed space, 
4,850 s.f. of loading dock space, and 1,700 s.f. of support office space. The monthly 
rental rate increases noted above reflect adjustments to the monthly shed space rental rate 
from an initial $0.38 per s.f. to a final $0.51 per s.f. for an average of $0.44 per s.f. over 
the term of the proposed lease. Given the relative scale of the loading dock and support 
office spaces in comparison to the shed space, rental rates for these areas remain constant 
throughout the term of the proposed lease at $0.20 and $1.00 per s.f. respectively. Please 
note that the loading dock space is not included in the existing lease as its use was not 
anticipated during the original lease negotiations. It was believed that all materials would 
enter the facility through ground level doors. While the vast majority of material does 
enter through these doors, to my knowledge Breda has in fact used the loading dock 



Source: Port of San Francisco 

30 



Attachment I 
Page 2 of 2 

intermittently over the term of the existing lease. As such, negotiations for the proposed 
lease addressed this matter by including the loading dock space and charging a rental rate 
of $0.20/s.f. that acknowledges its past intermittent use. 

The Port Commission ("Commission") has approved the terms of the proposed lease and 
has recognized that the average monthly rental rate for the shed space is SO. 01 below 
Commission-approved leasing parameters ($0.44 per s.f. versus a minimum parameter 
rate of SO. 45 per s.f.). The Commission has in essence pre-approved those leases which 
Port staff has managed to negotiate above these parameters. When a proposed lease is 
below the leasing parameters, the Commission is required to review and approve the 
lease on a case-by-case basis. 

The Commission has approved the terms of the proposed lease as negotiated by Port staff 
and, based on all aspects of the proposed lease, the proposed base monthly rent represents 
fair market value. Other factors influencing the Commission's decision to approve the 
proposed Breda lease include Breda's past improvements to the property totaling 
approximately 1.6 million dollars, Breda's integral role in producing light rail vehicles 
for the City's Municipal Railway and a desire to retain excellent tenants in a softening 
Real Estate market. 

The Port appreciates your efforts to calendar this proposed lease as soon as possible. The 
Port had planned to bring this lease to the Board of Supervisors sooner and thereby allow 
ample time for review. However, a labor dispute between Breda and the International 
Brotherhood of Electrical Workers ("IBEW") and the threat of a labor strike at the Pier 
80 facility delayed the delivery of the proposed lease. Upon successful resolution of the 
labor dispute, the proposed lease was promptly delivered for your review. 



F:\PJWs Word Files\Memos\Breda Budget Analyst Memo V.doc 



Source: Port of San Francisco 

31 



Attachment II 

PORT OF SAN FRANCISCO 
MEMORANDUM 

DATE: March 6, 2002 

TO: Maureen Singleton, Budget Analysts Office, Board of Supervisors 

FROM: Phil Williamson 

RE: File No. 02-0244; Proposed Lease to Breda Transportation, Inc. 

This memo is in response to your request for additional information about the lease of 
Pier 80 Shed D to Breda Transportation, Inc. The following table compares existing rent 
to both holdover rent and proposed rent. 

Size of Rate per Monthly Percent 

Document Premises (s.f.) Square Foot Rent Increase 

Existing Lease Shed: 164,397 S0.2801 $46,047.60 N/A 

Through 2/28/02 Office: 1,700 S0.2801 S 472.40 N/A 

Existing Lease Shed: 164,397 S0.3251 $53,452.02 16% 

During "Holdover" Office: 1,700 S0.3251 $ 547.98 16% 

Proposed Lease 

From Commence- Shed: 169,620 $0.38 $64,455.60 16% 

ment- 12/31/02 Office: 1,700 $1.00 $1,700.00 208% 

Dock: 4,850 S0.20 $ 970.00 N/A 

Proposed Lease Shed: 169,620 $0.41 $69,544.20 8% 

From 1/1 - 6/30/03 Office: 1,700 $1.00 $1,700.00 N/A 

Dock: 4,850 $0.20 $ 970.00 N/A 

* Proposed Lease Shed: 169,620 $0.45 $76,329.00 10% 
From 7/1 - 12/31/03 Office: 1,700 $1.00 $1,700.00 N/A 

Dock: 4,850 $0.20 $ 970.00 N/A 

* Proposed Lease Shed: 169,620 $0.51 $86,506.20 13% 
From 1/1 - 12/31/04 Office: 1,700 S1.00 $ 1,700.00 N/A 

Dock: 4,850 S0.20 $ 970.00 N/A 

Total Rent over the term of the proposed lease is $2,648,640.00 inclusive of the option 
period. 

* If tenant exercises 18-month option to extend lease. 

F:\PJWs Word Files\Memos\Breda Budget Analyst Memo Table.doc 



Source: Port of San Francisco 

52 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 

Item 8 - File 01-1773 



Note: At the Finance Committee meeting of February 27, 2002, the 
Committee released $221,000 out of the previously reserved funds of 
$253,237, with the remainder of $32,237 continued on reserved. 



Departments: 
Item: 

Amount: 
Source of Funds: 
Description: 



Department of Administrative Services (DAS) 
Department of Elections (DOE) 

Hearing to consider release of reserved funds in the 
amount of $32,237 for the Reapportionment 
Project. 

$32,237 

General Fund 

The proposed request by the Department of 
Elections is to release $32,237 of funds that were 
originally placed on reserve by the Finance 
Committee in the FY 2001-2002 budget to pay for a 
portion of the costs for the consultants for 
facilitation of neighborhood meetings, as part of the 
Reapportionment Project. 

The total amount which was originally placed on 
reserve during the FY 2001-2002 budget for the 
Reapportionment Project was $253,237. On 
February 27, 2002, the Finance Committee 
released $221,000 of the $253,237 originally placed 
on reserve, to fund the costs of various consultants, 
computer software and monitors, training, staff 
salaries, materials and supplies, public 
announcements, public meetings, and 

miscellaneous expenses. Approval of that $221,000 
release left the current balance of $32,237 on 
reserve. 

As previously reported, as part of the 
Reapportionment Project, the Elections Task Force 
proposes to utilize consultants for facilitation of 
neighborhood meetings at a total cost of $43,000 
(an average cost of approximately $3,910 per 
meeting for 11 neighborhood meetings). 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

33 



Memo to Finance Committee 

March 13, 2002 Finance Committee Meeting 



Comment: 



Recommendation: 



Ms. Tammy Haygood of the Department of 
Elections advises that the since the Finance 
Committee recently released $221,000 for the 
Department to begin work on the Reapportionment 
Project, there are currently sufficient funds for the 
Department to begin work on the Reapportionment 
Project. In addition, Ms. Haygood advises that the 
Department of Election is currently addressing the 
needs of the March 5, 2002 election. Therefore, Ms. 
Haygood requests that the subject $32,237 
requested release of reserve for the 
Reapportionment Project be continued for three 
weeks, until the April 3, 2002 Finance Committee 
meeting. 

Continue the requested $32,237 release of reserve 
until April 3, 2002, as requested by the 
Department. 




*?/ 



^ 



rvey M. Rose 



cc: Supervisor Peskin 
Supervisor Daly 
Supervisor Maxwell 
Clerk of the Board 
Controller 
Ben Rosenfield 
TedLakey 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

34 




City and County of San Francisco c,t y Ha " 

J J 1 Dr. Carlton B. 

Meeting Minutes Goodien Place 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: Gail Johnson 

Wednesday, March 20, 2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



MEETING CONVENED 

The meeting convened at 12:40 p.m. ■ 

020411 [Federal grant funds for the reconstruction of the hillside on San Jose Avenue from Richland to 
Highland Avenue in San Francisco] 
Supervisor Ammiano 

Resolution authorizing the Director of the Department of Public Works to accept and expend up to 5230,553 in 
federal Emergency Relief funds with required local matching funds of $29,871 for reconstruction of the hillside 
at San Jose Avenue from Richland to Highland in the City and County of San Francisco. 

3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at the March 
20, 2002 meeting. 

Heard in Committee. Speaker: Harvey Rose, Budget Analyst. 
RECOMMENDED., by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco I Printed al a:l)d PM on .17 04 



Finance Committee 



Meeting Minutes 



March 20, 2002 



020318 (Supplemental Appropriation, HIV/ AIDS Services] 
Supervisors Daly, Ammiano 

Ordinance appropriating 5739,727 from the General Fund Reserve for service for persons living with AIDS 
and HIV to offset losses of federal funding under the Ryan White Comprehensive AIDS Resources Emergency 
(CARE) Act for the Public Health Department in fiscal year 2001-02. 

(Fiscal impact.) 

2/27/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Dr. Jim Kahn, UCSF, Associate Director of 
AIDS Program at San Francisco General Hospital; Bill Hirsh, AIDS Legal Referral Panel; Robert Rybicki, 
Shanti; Jim Illig, Project Open Hand; Ben Rosenfield, Mayor's Budget Office; James Loyce, Deputy Director 
of Health, Director of AIDS Office, Department of Public Health; Jim Mitulski, Co-Chair, Mayor's HIV Health 
Services Planning Council; Catherine Geanuracos, Larkin Street Youth Services; Charlotte Bobek, UCSF 
Positive Health Program; Morris Fox, Immune Enhancement Project; University of Pacific School of 
Dentistry; Brian Cahill, Catholic Charities; Andrea Goetz, Glide - HIV AIDS Services; Naomi Prochovnick, 
Lyon-Martin Women's Health Services; Lori Shmulewitz, Haight Ashbury Free Clinics, Inc.; James Beck, 
Board of Directors, Haight Ashbury Neighborhood Council; Zach Cook, Quan Yin Healing Arts Center; Ron 
Stranger Horse, Native American AIDS Project; Christopher Gamora, Native American AIDS Project; Dana 
Van Gorder, San Francisco AIDS Foundation; Beverly Carnats, Lutheran Social Services; Bob Nelson. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020369 [MOU - Fire] 
Mayor 

Ordinance adopting and implementing the Memorandum of Understanding between Municipal Executives' 
Association (Fire) and the City and the County of San Francisco to be effective for the period July 1, 2001 
through June 30, 2003. (Mayor) 
3/4/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Alice Villagomez, Deputy Director, Employee 
Relations Division, Department of Human Resources. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020370 |MOU - Police] 
Mayor 

Ordinance adopting and implementing the Memorandum of Understanding between Municipal Executives' 
Association (Police) and the City and the County of San Francisco to be effective for the period July 1, 2001 
through June 30, 2003. (Mayor) 
3/4/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Alice Villagomez, Deputy Director, Employee 
Relations Division, Department of Human Resources. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Printed at 6:0" PM 



Finance Committee 



Meeting Minutes 



March 20, 2002 



020252 [2002 Finance Corporation Equipment Program] 
Mayor 

Resolution approving the form of and authorizing execution and delivery by the City and County of San 
Francisco of an equipment lease Supplement No. 9 (Series 2002a Bonds) between the City and the County of 
San Francisco Finance Corporation, as lessor, and the City and County of San Francisco, as lessee, with respect 
to the equipment to be used for city purposes, a related certificate of approval and a continuing disclosure 
certificate; approving the issuance of lease revenue bonds by said nonprofit corporation in an amount not to 
exceed $9,000,000; providing for reimbursement to the City of certain city expenditures incurred prior to the 
issuance of Lease Revenue Bonds; and providing for the execution of documents in connection therewith and 
ratifying previous actions taken in connection therewith. (Mayor) 

(Fiscal impact.) 

2/27/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Ben Rosenfield. Mayor's Budget Office; Nadia 
Sesay, Mayor's Office of Public Finance. 
RECOMMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



020368 [Supplemental Appropriation - San Francisco's Finance Corp.] 
Mayor 

Ordinance appropriating $8,420,000 from the sale of lease-revenue bonds by the Mayor's Finance Corporation 
to fund purchase of equipment citywide for fiscal year 2001-02. (Mayor) 

(Fiscal impact.) 

3/4/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Ben Rosenfield, Mayor's Budget Office; Nadia 

Sesay, Mayor's Office of Public Finance. 

Amended on page 1, line 4, by replacing "Mayor's" with "San Francisco." New title. 

AMENDED. 

Ordinance appropriating $8,420,000 from the sale of lease-revenue bonds by the San Francisco Finance 

Corporation to fund purchase of equipment citywide for fiscal year 2001-02. (Mayor) 

(Fiscal impact.) 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Primed ai h:(>- I'M on 3 2 IU 



Finance Committee Meeting Minutes March 20, 2002 



011773 [Reserved Funds, Department of Elections] 

Hearing to consider release of reserved funds, Department of Elections, fiscal year 2001-02 budget, in the 

amount of $32,237 for the reapportionment project. (Elections Department) 

10/2/01, RECEIVED AND ASSIGNED to Finance Committee. Department requests this item be calendared at the October 17, 2001 

meeting. 

10/17/01, CONTINUED TO CALL OF THE CHAIR. Hearing held. Speakers: Harvey Rose, Budget Analyst; Tammy Haygood, Director 

of Elections; Chris Bowman, former member, Citizens Advisory Committee on Elections. 

2/27/02, AMENDED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Tammy Haygood, Director of Elections; Edward 

Harrington, Controller. 

Release of reserved funds in the amount of $221,000 approved. Consideration of remainder ($32,237) continued to 3/13/02. Title of 

hearing amended by replacing "$253,237" with "$32,237." 

2/27/02, CONTINUED AS AMENDED. 

3/13/02, CONTINUED. Heard in Committee. Tammy Haygood, Director of Elections; Quintin Mecke, Task Force on Redisricting; 

Harvey Rose, Budget Analyst. 

Continued to March 20, 2002. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Tammy Haygood, Director of Elections. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020248 [Supplemental Appropriation, Department of Elections] 

Ordinance appropriating 53,858,870 of the General Reserve and reappropriating $1,800,000 from the lease- 
purchase of election equipment for a total of $5,658,870 to fund salaries, fringe benefits, other current 
expenses, materials and supplies, and equipment for the Department of Elections for fiscal year 2001-02. 
(Elections Department) 

(Fiscal impact.) 

2/19/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Edward Harrington, Controller; Theodore 

Lakey, Deputy City Attorney; Tammy Haygood, Director of Elections ; Ara Minassian, Administrative 

Services; Taylor Emerson, Mayor's Budget Office; Debra Newman, Budget Analyst's Office; Commissioner 

Alex Rosenthal, Elections Commission; Commissioner Tom Schulz, President, Elections Commission; Michael 

Hennessey, Sheriff; Josh Kaufman. 

Question divided. Question concerning Professional and Specialized Services Contracts; Maintenance - 

Buildings & Improvements ; Maintenance Equipment Contract; Rents & Leases - Bldgs. & Improvements; 

Rents & Leases - Equipment; Other Current Expenses; Judgments - Legal Fees; Taxes, Licenses and Permits; 

Materials and Supplies; Equipment Loan Payment; and Interdepartmental Recoveries severed and considered 

separately. See File 020486. 

DIVIDED. 

Amended on page 2 by replacing "SI, 61 6, 129" with "$1,339,544, " and replacing "$280,24 1" with "$237,887. " 
AMENDED. 

Ordinance appropriating $1,372,007 of the General Reserve and reappropriating $1,800,000 from the lease- 
purchase of election equipment for a total of $3,172,007 to fund salaries, fringe benefits, and other current 
expenses for the Department of Elections for fiscal year 2001-02. (Elections Department) 

(Fiscal impact.) 

REFERRED WITHOUT RECOMMENDATION by the following vote: 

Ayes; 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 4 Printed at 6:07 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



March 20, 2002 



020486 [Supplemental Appropriation, Department of Elections] 

Ordinance appropriating $2,167,924 of the General Reserve to fund other current expenses, materials and 
supplies, and equipment for the Department of Elections for fiscal year 2001-02. (Finance Committee) 

Divided from File 020248. 

CONTINUED TO CALL OF THE CHAIR by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020251 [Reserved Funds, Department of the Environment] 

Hearing to request release of reserved funds, Department of the Environment (Fiscal Year 2001-2002 Budget), 
in the amount of $104,300 to provide professional services in support of Department programs. (Environment) 
2/28/02, RECEIVED AND ASSIGNED to Finance Committee. 
Speakers: None. 
Continued to 4/3/02. 



CONTINUED by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



SPECIAL ORDER - 2:30 PM 



The Chair will entertain a motion to continue consideration of the following item (File 020198) 
to a future meeting: 



020198 [Determination of Fees at Harding Park and Fleming Golf Courses] 
Supervisors Hall, Daly 

Ordinance amending Article XII of the San Francisco Park Code by adding Section 12.12 thereto setting forth 

a fee structure for Harding Park and Fleming Golf Courses. 

2/4/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 3/6/2002. 

3/11/02, ASSIGNED to Finance Committee. 

3/11/02, SUBSTITUTED to Finance Committee. Supervisor Hall submitted a substitute ordinance bearing same title. 

Speakers: None. 
Continued to 3/27/02. 
CONTINUED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 5:04 p.m. 



City and County of San Francisco 



Printed at b:tr r\l ,■:• 3 J 114 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



JBOARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 

March 14, 2002 



TO: ,, Finance Committee 

FROM: ^Budget Analyst 

SUBJECT: March 20, 2002 Finance Committee Meeting 

Item 1- File 02-0411 



DOCUMENTS DEPT. 

MAR 2 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Department: 
Item: 



Grant Amount: 
Grant Period: 
Source of Funds: 

Required Match: 
Indirect Costs: 



Department of Public Works (DPW) 



Resolution authorizing the Director of Public Works to 
accept and expend up to $230,553 in Federal Highway 
Administration funds, with required local matching funds 
of $29,872 for reconstruction of the hillside at San Jose 
Avenue from Richland Avenue to Highland Avenue in the 
City and County of San Francisco. 

$230,553 

Grant funds must be expended prior to May of 2009. 

Federal Department of Transportation, Federal Highway 
Administration (FHWA) 

$29,872, or approximately 13 percent of the grant of 
$230,553. The matching funds of 529,872 are included in 
the DPW's approved FY 2001-2002 budget. 

According to Ms. Theresa Burke of the DPW, 
reimbursement of indirect costs is not permitted under 
Federal Highway Administration grants. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Description: The proposed resolution would authorize the DPW to 

accept and expend $230,553 of Federal Highway 
Administration grant funds to permanently reconstruct 
the hillside along San Jose Avenue between Richland 
Avenue and Highland Avenue which was damaged by the 
severe El Nino winter storms in February 1998. The 
winter storms resulted in slope movement, which 
threatened public safety and property. Since February of 
1998, the DPW has used its own labor to remove debris 
from the site and to erect a temporary screen that 
prevents the remaining debris from falling onto the 
roadway. 

The proposed hillside reconstruction project, which would 
permanently repair the site, would cost $402,510, of 
which the proposed resolution represents a total of 
$260,425, including $230,553 of the subject grant funds 
and $29,872 of matching funds. The remaining $142,085 
($402,510 less $260,425) of project funding has previously 
been approved by the Board of Supervisors in August of 
1999 ($124,088, Resolution No. 744-99) and December of 
2001 ($17,997, Resolution No. 980-01). 

Budget: A summary budget provided by the DPW for the total 

estimated project costs of $402,510, including all funding 
sources, which is comprised of (1) $124,088 of funds 
previously approved in August of 1999, (2) $17,997 of 
funds previously approved in December of 2001 and (3) 
$260,425 of funds under the proposed resolution, 
including $230,553 of the subject grant funds and $29,872 
of matching funds, is as follows: 

Construction Contract Bid Amount (See Comment No. 3) $309,341 
10% Contingency Fund 30.934 

Total Construction $340,275 

DPW Labor 62.235 

Project Total $402,510 

Attachment I, provided by the DPW, details the $340,275 
construction budget. Attachment II, provided by the 
DPW, contains the budgetary details for the $62,235 of 
DPW in-house labor costs for engineering, construction 
management and construction engineering, resulting in 
total project costs of $402,510 as shown in Attachment I. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

2 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Comments: 1. Ms. Burke reports that, to date, the subject grant funds 

have not been accepted or expended. 

2. Ms. Burke advises that the DPW conducted a 
competitive bidding process in August of 2001 and the low 
construction bid received was $309,341 from NCCI, Inc. 
Ms. Burke reports that the DPW will award the 
construction contract upon approval of the proposed 
resolution. 

3. Attachment III, provided by the DPW, contains the 
Grant Application Information Form, which includes the 
Disability Access Checklist. 

Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

3 



San Jose Avenue Hillside Repair from Highland to Richland Avenues 
Lowest Responsible Responsive Bidder 



Attachment I 
Page 1 of 1 



:■■: ~em 


..ESTIMATED-' 

:. -QUANTITY ; 


• UNIT 


UNIT . 
PR.CE^- 


■ 'AMOUNT 


1 


Excavation Permit ree and ravement Damage 
Public Works Code 




Allowance 


S300 


$300 


2 


Project Sign 


... 


LS 


S650 


S650 


3 


Traffic Routing Work 


— 


LS 


S26.000 


$26,000 


4 


Richland Ave. Embankment Excavation, 
including Hauling and Stockpiling 


880 


CY 


S51 


$44,880 


5 


Richland Ave. Embankment Tree Services, 
including Removal. Preservation and 

Tnmrrur^ 




LS 


S9.400 


$9,400 


6 


Richland Ave. Embankment Construction, 
including Removal from Stockpiling, Hauling. 
Placing, and Compacting 


850 


CY 


S79 


$67,150 


7 


Seeding 700 


SY 


S6 


$4,200 


8 


Maintenance of Seeded Areas 




LS 


S3.000 


$3,000 


9 


10" PVC Collector Pipe. Installed 


160 


LF 


$41 


$6,560 


10 


0- PVC Perforated Pipe. Installed 


200 


LF 


S38 


57.600 


11 


10" PVC 45 Degree Ells. Installed 


10 


EA 


$61 


$610 


12 


Drainage Trench Excavation 


13 


CY 


$690 


$8,970 


13 


3/4 -Inch Gravel Trench Backfill 


50 


CY 


$92 


$4,600 


14 


Non-Woven Geotexttle Wrap. Installed 


4.000 


SF 


$2 


$8,000 


15 


Mtsc Fittings, Incl. 4" Vent Pipe, Vent Cover, 
and 10" Trap. Installed 


1 


EA 


$911 


$911 


16 


Trench Excavation. Back! ill and Support for 
Sewer Work 


._ 


LS 


$11,000 


$11,000 


17 


10- Inch Diameter VCP Sewer Culvert, 
Installed (Quanhty can be increased or 
decreased) 


45 


LF 


$75 


$3,375 


18 


Standard Concrete Catchbasin with New 
Frame and Grating per SFDPW Standard Plan 
LL-1S.039.1 Ch-7. Installed 


1 


EA 


$4,500 


$4,500 


19 


2-[nch Thick Asphalt Concrete Wearing 
Surface for sewerTrench (Quanhty can be 
increased or decreased) 


135 


SF 


$6 


$810 


20 


8-Inch thick Concrete Base for Sewer Trench 
(Quantity can be increased or decreased) 


135 


SF 


$17 


$2,295 


21 


3 Vi-Inch thick Concrete Sidewalk (Quannry 
can be increased or decreased) 


48 


SF 


$18 


$864 


22 


6-Inch Concrete Curb and 1 Vi-Foot Gutter 
(Quantity can be increased or decreased) 


9 


LF 


$64 


$576 


23 


Excavation Permit Fee and Pavement Damage 
Fee Assessed by B5M per Article 2.4 of the 
Public Works Code 




Allowance 


$300 


$300 


24 


Project Sign 




LS 


$650 


$650 


25 


Traffic Routing Work 




LS 


$25,000 


$25,000 


26 


Highland Avenue Excavation 


200 


CY 


$198 


$39,600 


27 


Drill 4* Diameter by 18" Long Weephole 


4 


EA 


$400 


$1,600 


28 


Highland Avenue Backfill (Rockfill) 


320 


TON 


$67 


$21,440 


29 


Rock Slope Proiecnon Fabric 


1.500 


SF 


$3 


$4,500 



SUBTOTAL: 

10% Contingency: 



$309,341 
$30,934 



TOTAL Construction: 

Labor: 



Federal Fund 

Slide Repair Matching Fund 



5340,275 
562,235 



$402,510 



$356,342 
S46.168 



TOTAL PROJECT: 



Provided by the DPW 



PREVIOUS: 




Federal Fund 


$125,965 


Slide Repair Matching Fund 


$16,120 




$142,085 


ADDITIONAL 




Federal Fund 


$230,553 


Slide Repair Matching Fund 


$29,872 




$260,425 


TOTAL PROJECT: 


$402,510 



Attachment II 
^age 1 of 1 



San Jose Hillside Repair from Highland to Richland Avenues 



DPW LABOR BUDGET 



Engineering 

Title 




Class. No. 


Hrly Rate 


Hrs 




Totals 


Project Manager 
Civil Engineer 
Associate Civil Engineer 


TOTAL 


1446 
5208 
5206 


S 114 
S 99 
S 85 


10.00 
55.00 
54.00 


$ 
$ 
$ 


1,140 
5,427 

4,602 




119.00 


$ 


11,169 








Construction Management 
Title 


Class. No. 


Hrly Rate 


Hrs 




Totals 


Civil Engineer 
Associate Civil Engineer 
Construction Inspector 
Testing Lab Technician 

TOTAL 

Construction Engineering 
Title 


5208 
5206 
6318 
5305 

Class. No. 


S 99 
S 85 
S 80 

S 59 


90.00 

36.00 

360.00 

50.00 


$ 
$ 
S 
$ 


8,880 

3,068 

28,933 

2,940 


Hrly Rate 


536.00 
Hrs 


$ 


43,822 




Totals 


Project Manager 
Civil Engineer 
Associate Civil Engineer 


TOTAL 


1446 
5208 
5206 


S 114 
S 99 
S 85 


12.00 
25.00 

40.00 


$ 

$ 

$ 


1,368 
2,467 
3,409 




77.00 


$ 


7,244 







TOTAL LABOR BUDGET 



62,235 



Provided by the DPW 



Attachment III 
Page 1 of 2 

File Number: 

(Provided by Clerk of Board of Supervisors) 

Grant Information Form 

(Effective January 2000) 

Purpose: Accompanies proposed Board of Supervisors resolutions authorizing a Department to accept and 
expend grant funds. 

The following describes the grant referred to in the accompanying resolution: 

1 . Grant Title: Emergency Relief Funds (ER) 

2. Department: Public Works 

3. Contact Person: Theresa Burke Telephone: 558-4506 

4. Grant Approval Status (check one): 

X Approved by funding agency [ ] Not yet approved 

5. Amount of Grant Funding Approved or Applied for: $ 230,554 

6a. Matching Funds Required: $ 29,871 

b. Source(s) of matching funds (if applicable): Department of Public Works Funds - Slide Repair Matching 
Fund 

7a. Grant Source Agency: U.S. Department of Transportation, Federal Highway Administration (FHWA) 
b. Grant Pass-Through Agency (if applicable): California Department of Transportation (Caltrans) 

8. Proposed Grant Project Summary: 

San Jose Ave. Hillside Reconstruction Project 

Project Limits: San Jose Avenue from Richland Avenue to Highland Avenue. Scope of work includes: 
embankment excavation and backfill; tree removal; installation of subsurface drainage; construction of a 
catch basin; restoration of the concrete sidewalk; and, performing traffic routing work. 



9. Grant Project Schedule, as allowed in approval documents, or as proposed: 

Start-Date: May 1999 End-Date: May 2009 

10. Number of new positions created and funded: -0- 

11. If new positions are created, explain the disposition of employees once the grant ends? 

12a. Amount budgeted for contractual services: S 230,553 



' ' '• Attachment III 

Page 2 of 2 

b. Will contractual services be put out to bid? Yes 

c. If so, will contract services help to further the goals of the department's MBE/WBE 

requirements? Yes 

d. Is this likely to be a one-time or ongoing request for contracting out? One-time 

13a. Does the budget include indirect costs? [ ] Yes [X] No 

b1. If yes, how much? $ 

b2. How was the amount calculated? 

c. If no, why are indirect costs not included? 

[X] Not allowed by granting agency [ ] To maximize use of grant funds on direct services 

[ ] Other (please explain): 

14. Any other significant grant requirements or comments: 



"Disability Access Checklist*** 

15. This Grant is intended for activities at (check all that apply): 

[X] Existing Site(s) [ ] Existing Structure(s) [ ] Existing Program(s) or Service(s) 

[ ] Rehabilitated Site(s) [ ] Rehabilitated Structure(s) [ ] New Program(s) or Service(s) 

[ ] New Site(s) [ ] New Structure(s) 

16. The Departmental ADA Coordinator and/or the Mayor's Office on Disability have reviewed the proposal 
and concluded that the project as proposed will be in compliance with the Americans with Disabilities Act and 
all other Federal, State and local access laws and regulations and will allow the full inclusion of persons with 
disabilities, or will require unreasonable hardship exceptions, as described in the comments section: 

Comments: 



Departmental or Mayor's Office of Disability Reviewer: 

Susan Ferreyra 



Date Reviewed: 



Department Approval 



Edwin M. Lee Director of Public Works 



(Signature) 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Item 2 - File 02-0318 

Note: This report is based on an Amendment of the Whole which reduced the 
supplemental appropriation request from the original amount of $739,727 to 
$575,341. 



Department: 
Item: 



Amount: 
Source of Funds: 
Description: 



Public Health (DPH) 

Ordinance appropriating $575,341 from the General Fund 
Reserve to the Department of Public Health to fund 
existing programs for persons living with AIDS and HIV, 
in order to offset a loss of Federal funds provided to the 
City under the Ryan White Comprehensive AIDS 
Resources Emergency (CARE) Act. 

$575,341 

General Fund Reserve 

The proposed supplemental appropriation would provide 
$575,341 from the General Fund Reserve to the 
Department of Public Health (DPH) to offset a reduction 
in Federal Ryan White Comprehensive AIDS Resources 
Emergency (CARE) funding which the DPH had 
anticipated receiving in FY 2001-2002. Of the requested 
$575,341, $538,505 would be used to supplement existing 
contracts with 64 nonprofit organizations which assist 
persons living with AIDS and HIV. The balance of 
$36,836, $575,341 less $538,505, would be used to pay for 
DPH costs for administering these contracts. 

According to Ms. Monique Zmuda of DPH, the services for 
persons living with AIDS and HIV include primary care 
services, rental subsidies, case management, 
psychological consultations, meal delivery, emergency 
financial assistance, transportation and advocacy. These 
funds would be expended for the period of March 1, 2002 
through June 30, 2002. 

The Attachment, provided by DPH, includes a list of the 
119 nonprofit agency contracts and the amounts to be 
allocated to each nonprofit contractor totaling $538,505 
(excluding administrative costs of $36,836). 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

8 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



In CARE Fiscal Year 2001-2002, or March 1, 2001 
through February 28, 2002, the 119 contracts with 
nonprofit agencies for HIV and AIDS services listed in the 
Attachment, provided by DPH, expended total Federal 
funds of $31,039,590. In CARE Fiscal Year 2002-2003, or 
March 1, 2002 through February 28, 2003, these 
programs would have been allocated $31,517,090 if 
Federal CARE funding had not been reduced. However, 
with the Federal funding reduction, the amount of funds 
available for the 119 contracts is $29,901,575, a shortfall 
of $1,615,515. Including the $110,508 shortfall in 
administrative costs for DPH, the total shortfall for 12 
months is $1,726,023. In order to cover the projected 
$1,726,023 shortfall for such contracts and for DPH 
administration for the last four months of the City's 
Fiscal Year 2001-2002, or March 1, 2002 through June 30, 
2002, this proposed supplemental appropriation would 
appropriate $575,341 from the General Fund Reserve for 
the four-month period from March 1, 2002 through June 
30, 2002. 



Comment: 



Recommendation: 



Because the proposed supplemental appropriation would 
reduce the General Fund Reserve by $575,341 when the 
City is facing a projected revenue shortfall of $154.1 
million for FY 2002-2003, the proposed supplemental 
appropriation is a policy matter for the Board of 
Supervisors. 

The Budget Analyst considers approval of the proposed 
supplemental appropriation to be a policy decision for the 
Board of Supervisors, as noted in the Comment above. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



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18 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Items 3 and 4 - Files 02-0369 and 02-0370 



Departments: 



Department of Human Resources (DHR) 
Fire Department 
Police Department 



Items: 



Description: 



02-0369 

Ordinance adopting and implementing the Memorandum 
of Understanding between the Municipal Executives' 
Association (MEA) - Fire, Bargaining Unit F3, and the 
City and County of San Francisco, to be effective for the 
two-year period retroactively from July 1, 2001 through 
June 30, 2003. 

02-0370 

Ordinance adopting and implementing the Memorandum 
of Understanding between the MEA - Police, Safety 
Bargaining Units P-3-0, P-3-2 and P-3-1, and the City and 
County of San Francisco, to be effective for the two-year 
period retroactively from July 1, 2001 through June 30, 
2003. 

02-0369 (MEA - Fire) 

In September of 2000, the Board of Supervisors approved 
a Memorandum of Understanding (MOU) with the MEA - 
Fire, Bargaining Unit F3, for the two-year period 
retroactive from July 1, 1999 through June 30, 2001 (File 
00-1356). The proposed MOU between the City and the 
MEA - Fire, Bargaining Unit F3, which is the successor 
agreement to the MOU that expired on June 30, 2001, 
would be for the two year period, retroactive from July 1, 
2001 through June 30, 2003. The proposed MOU would 
cover the following uniform exempt management 
classifications of the Fire Department, comprising a total 
of 12 budgeted positions: 



Position 


Number of 
Employees 


0140 Chief of Fire Department 


1 


0150 Deputy Chief of Department 


2 


H-51 Assistant Deputy Chief II 


8 


H-53 Emergency Medical Services Chief 


1 


Total 


12 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

19 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



02-0370 (MEA - Police) 

In January of 1998, the Board of Supervisors approved a 
MOU with the MEA - Police, Safety Bargaining Unit P-3, 
consisting of the Chief of Police and the Assistant Chief of 
Police classifications, for the nine-year period retroactive 
from July 1, 1992 through June 30, 2001 (File 93-97-3). 
According to Ms. Alice Villagomez of DHR, the 
classification Q90 Director of Police Psychology, which is 
in the P-3-2 Unit, is a new rank created and assigned to 
the MEA - Police MOU during the term of the previous 
MOU. Ms. Villagomez advises that the classification Q63 
Criminologist, which is in the P-3-1 Unit, was an existing 
rank that previously was unrepresented and assigned to 
the MEA - Police during the term of the prior MOU. The 
proposed MOU between the City and the MEA - Police, 
Safety Bargaining Units P-3-0, P-3-2 and P-3-1, which is 
the successor agreement to the MOU that expired on June 
30, 2001, would be for the two year period retroactive 
from July 1, 2001 through June 30, 2003. The proposed 
MOU would cover the following uniform exempt 
management classifications at the Police Department, 
comprising a total of four budgeted positions: 



Position 


Number of 
Employees 


0390 Chief of Police Department 


1 


0395 Assistant Chief of Department 


1 


Q 90 Director of Police Psychology 


1 


Q 63 Criminologist 


1 


Total 


4 



Major Economic 
Impact Changes And 
Other Pertinent 
Provisions: 



The major economic changes of the two proposed new 
subject MOUs are as follows: 



Salary Increases 
MEA - Fire 

The proposed MOU between the City and the MEA - Fire, 
Bargaining Unit F3, establishes the following schedule of 
salary increases totaling 16 percent: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

20 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



> Retroactive to July 1, 2001, a salary increase of 4.0% 

> Retroactive to January 5, 2002, a salary 

increase of 4.0% 

> July 1, 2002, a salary increase of 4.0% 

> January 4, 2003, a salary increase of 4.0% 
Total Salary Increases 16.0% 

As shown in Attachment I provided by the Controller's 
Office, the Controller's Office estimates these wage 
increases will result in increased salary costs of $92,832 
in Fiscal Year 2001-2002 and $133,877 in Fiscal Year 
2002-2003. 

ME A- Police 

The proposed MOU between the City and the MEA - 
Police, Safety Bargaining Units P-3-0, P-3-2 and P-3-1, 
establishes the following schedule of salary increases 
totaling 16 percent: 

> Retroactive to July 1, 2001, a salary increase of 4.0% 

> Retroactive to January 5, 2002, a salary 4.0% 

increase of 

> July 1, 2002, a salary increase of 4.0% 

> January 4, 2003, a salary increase of 4.0% 
Total Salary Increases 16.0% 

As shown in Attachment II provided by the Controller's 
Office, the Controller's Office estimates these wage 
increases will result in increased salary costs of $33,118 
in Fiscal Year 2001-2002 and $47,760 in Fiscal Year 2002- 
2003. 

According to Ms. Villagomez, the wage increases provided 
in the two subject MOUs are consistent with the wage 
increases provided to other City employees for Fiscal Year 
2001-2002 and Fiscal Year 2002-2003, including the wage 
increases provided to employees covered by the San 
Francisco Fire Fighters Union, Local 798, Units 1 and 2, 
MOUs, which were ratified by the Board of Supervisors in 
November of 2001 (Files 01-1843 and 01-1868), and the 
Police Officers Association MOU, which was ratified by 
the Board of Supervisors in August of 2001 (File 01-1320). 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

21 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Ms. Villagomez states that the four percent wage increase 
effective July 1, 2001 and the four percent wage increase 
effective January 5, 2002, would be retroactive and would 
be paid as a lump sum payment following the date in 
which the Board of Supervisors ratifies the two subject 
MOUs. According to Ms. Villagomez, the subject MOUs 
are retroactive to July 1, 2001, pursuant to San Francisco 
Charter Section 8.590-4, which provides for the effective 
date of the subject MOUs. 1 



Other Premium Pay 
MEA - Fire 

Under the proposed MOU, covered employees with 27 
years or more of continuous service with the Fire 
Department would receive an additional two percent of 
base pay as a service premium, commencing July 1, 2002. 
This provision is not contained in the previous MOU. The 
Controller's Office estimates that the proposed two 
percent service premium would result in additional costs 
to the City of $16,880 in Fiscal Year 2002-2003. 

MEA - Police 

Under the proposed MOU, covered employees with 25 
years or more of continuous service with the Police 
Department would receive an additional two percent of 
base pay as a service premium, commencing July 1, 2002. 
This provision is not contained in the previous MOU. The 
Controller's Office estimates that the proposed two 
percent service premium would result in additional costs 
to the City of $10,084 in Fiscal Year 2002-2003. 

The proposed two percent service premium will be 
considered part of an employee's salary for the purpose of 
computing retirement benefits and contributions. Also, a 
covered employee who is eligible for the two percent 
service premium would continue to receive the premium 
while receiving disability benefits, under the proposed 



1 According to Ms. Villagomez, under Charter Section 8.590-4, DHR is required to complete 
negotiations with employee organizations other than Fire and Police uniformed ranks prior to the 
expiration date of the respective MOUs. Ms. Villagomez states that, because the Charter does not 
specifically require DHR to complete negotiations with the MEA - Fire and the MEA - Police by the 
expiration date of the MOUs, DHR completed negotiations with 38 other employee organizations 
prior to completing negotiations with the MEA - Fire and the MEA - Police. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

22 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



MOU. The proposed two percent premiums in the two 
subject MOUs are consistent with the two percent 
premiums provided to employees covered by the Fire 
Fighters Union, Local 798, Units 1 and 2, MOUs and the 
Police Officers Association MOU. 

The Budget Analyst notes that it is unclear whether the 
proposed additional two percent service premium is 
intended as (1) a one-time only premium benefit, effective 
for just the second year of the proposed MOUs, or (2) an 
ongoing premium benefit, which will result in future year 
additional costs to the City. According to Ms. Villagomez, 
the proposed MOUs do not specify if the proposed 
additional two percent service premium is a one-time only 
premium benefit or an ongoing premium benefit because 
this will be determined when this provision is evaluated 
at the end of Fiscal Year 2002-2003. 



Acting Assignment Pay 
MEA - Fire 

Effective July 1, 2001, all four classifications covering 12 
employees will receive IVi percent additional 
compensation above the member's base rate of pay if the 
covered employee performs the duties of a higher rank for 
longer than 10 consecutive working days. Currently, 
covered employees receive the compensation of a higher 
rank once a covered employee has performed the duties of 
a higher rank for longer than 30 consecutive working 
days. The additional pay will be retroactive to the first 
day of the assignment. As noted in Attachment I, the 
Controller's Office does not have an estimated cost for this 
provision as of the writing of this report. 

MEA - Police 

There is no change between the previous and the new 
MOU for the MEA - Police for the Acting Assignment Pay 
provision. Once a covered employee has performed the 
duties of a higher rank for longer than 30 consecutive 
working days, the covered employee receives the salary of 
that rank. This pay is not retroactive to the first day of 
the assignment. According to Ms. Villagomez, the 
difference between the MEA - Fire and the MEA - Police 
MOUs regarding the Acting Assignment Pay provision is 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

23 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



due to variations in the negotiated contracts between the 
bargaining units. 



Administrative Assignment Pay 
MEA - Fire 

Employees in classifications H-51 Assistant Deputy Chief 
II and H-53 Emergency Medical Services Chief, who are 
assigned by the Chief of the Fire Department to a 40-hour 
work week, will receive additional compensation of $243 
biweekly, or approximately $529 per month for 
Administrative Assignment Pay in recognition that such 
covered employees are not eligible for overtime 
compensation. Currently, the H-51 and H-53 
classifications receive additional compensation of $225 
biweekly, or approximately $489 per month for 
Administrative Assignment Pay. Therefore, the proposed 
MOU will provide an 8 percent increase for 
Administrative Assignment Pay. 

This additional compensation would not be included in 
the calculation of retirement benefits from the Employees 
Retirement System or any other benefits that are a 
function of percentage of salary. 

The Controller's Office does not have an estimated cost for 
this provision as of the writing of this report. 

MEA - Police 

The previous and proposed MOU for the MEA - Police 
does not have a provision for Administrative Assignment 
Pay. However, covered employees under this MOU do 
receive overtime pay, and there is no change from the 
previous MOU. According to Ms. Villagomez, the 
difference between the MEA - Fire and the MEA - Pohce 
MOUs regarding the Administrative Assignment Pay 
provision is due to variations in the negotiated contracts 
between the bargaining units. 



Executive Leave 
MEA - Fire 

There is no change between the previous and the new 
MOU for MEA - Fire for the Executive Leave provision. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

24 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Employees covered by the subject MOU in classifications 
0140 Chief of Fire Department and 0150 Deputy Chief of 
Fire Department would continue to receive five days of 
paid Executive Leave per fiscal year. Up to five days of 
unused Executive Leave may be carried over into the next 
fiscal year. Employees in classifications H-51 Assistant 
Deputy Chief II and H-53 Emergency Medical Services 
Chief will continue to receive two days of paid leave per 
fiscal year. Up to two days of unused Executive Leave 
may be carried over into the next fiscal year. 

For all employees covered by the subject MOU, Executive 
Leave may only be taken as paid time off and cannot be 
cashed out at the end of the year or at retirement. 

MEA - Police 

The proposed MOU contains language to specify that only 
employees in the P-3-0 Unit, which includes 
classifications 0390 Chief of Police and 0395 Assistant 
Chief of Police, would continue to receive five days of paid 
Executive Leave per year, the same Executive Leave 
provision for these classifications as contained in the 
previous MOU. As previously noted, the previous MOU 
did not cover the classifications Q90 Director of Police 
Psychology in the P-3-2 Unit or the Q63 Criminologist in 
the P-3-1 Unit. Executive Leave days may not be carried 
over into the next fiscal year. 

For all employees in the P-3-0 Unit covered by the subject 
MOU, Executive Leave may only be taken as paid time off 
and cannot be cashed out at the end of the year or at 
retirement. 



Administrative Leave 
MEA - Fire, Airport Only 

Effective July 1, 2002, covered employees in the H-51 
Assistant Deputy Chief II classification assigned to fire 
suppression at the Airport may earn, at straight time, and 
carry a balance of up to 120 hours of paid Administrative 
Leave. Such covered employees may carryforward a 
balance of up to 100 hours of earned but unused paid 
Administrative Leave into the next fiscal year. Earned 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Administrative Leave hours must be related to a Federal 
Aviation Administration (FAA) alert. 

For such employees in the H-51 Assistant Deputy Chief II 
classification at the Airport, Administrative Leave may 
only be taken as paid time off and cannot be cashed out at 
the end of the fiscal year or at retirement. Ms. Villagomez 
reports that the Fire Department currently has one 
employee in the H-51 Assistant Deputy Chief II 
classification at the Airport. 

The previous MOU does not contain a provision for such 
Administrative Leave. 

MEA - Police 

Effective July 1, 2002, covered employees in the P-3-1 
Unit, consisting of the Q63 Criminologist classification, 
may earn, at straight time, and carry a balance of up to 
120 hours of paid Administrative Leave. The single 
covered employee in this classification may carryforward 
a balance of up to 100 hours of earned but unused paid 
Administrative Leave into the next fiscal year. 

For all employees in the P-3-1 Unit covered by the subject 
MOU, Administrative Leave may only be taken as paid 
time off and cannot be cashed out at the end of the fiscal 
year or at retirement. 

The previous MOU does not contain a provision for such 
Administrative Leave. 

As stated by Ms. Pamela Levin of the Controller's Office 
in Attachments I and II, "This provision may result in 
overtime costs for those employees who are backfilled and 
in lost productivity for non-backfilled employees; however, 
we have not estimated a cost for this provision at this 
time." 



Training and Education Achievement Pay 
MEA - Eire 

Under the previous MOU, covered classes received two 
increases of three percent of their base wage each on July 
1, 1999 and July 1, 2000 for Training and Education 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

26 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Achievement Pay, or a total increase of six percent. Under 
the proposed new MOU, covered employees would again 
receive an increase of six percent of their base wage 
effective July 1, 2001 for Training and Education 
Achievement Pay. The additional Training and Education 
Achievement Pay will be considered part of an employee's 
salary for the purpose of computing retirement benefits 
and contributions. 

MEA - Police 

Under the previous and proposed MOU, there is no 
change in Training and Education Achievement Pay and 
covered employees are eligible to continue to participate 
in the management development training programs 
provided for under the MEA Miscellaneous MOU for July 
1, 2001 through June 30, 2003. Under the MEA 
Miscellaneous MOU, a premium of four percent of base 
wage is paid to covered employees with an intermediate 
Peace Officer Standards and Training (POST) certificate. 
A premium of six percent of base wage is paid to covered 
employees with an advanced POST certificate. 



Wellness Program 

Ms. Villagomez reports that the Wellness Program 
included in the previous MOUs and which would remain 
in effect during Fiscal Year 2001-2002 is intended to 
reduce the rate of sick leave use and therefore, decrease 
overtime expenditures to backfill positions to cover for 
firefighters and police officers who are on sick leave. 

MEA - Fire 

Under the previous MOU and for only the first year of the 
proposed MOU, or Fiscal Year 2001-2002, covered 
employees who have accrued at least 600 sick leave hours 
are eligible to participate in the Wellness Program. Once 
a core amount of 600 hours of sick leave has been accrued 
for each covered employee, suppression employees can 
cash out 60 hours and non-suppression employees can 
cash out 50 hours of sick leave hours under the following 
conditions: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

27 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Suppression Members (those working 24-hour shifts') : 
If the average annual sick leave for all Suppression 
Members in Bargaining Unit F3 is not more than 
three 12-hour watches (36 hours) in Fiscal Year 2001- 
2002, and if an individual uses 36 hours or less of sick 
leave in Fiscal Year 2001-2002, then he or she will be 
entitled to cash out a total of 60 hours of accrued sick 
leave during that same fiscal year. 

Non-Suppression Members (those working a 40-hour 
work week) : If the average annual sick leave for all 
Non-Suppression Members in Bargaining Unit F3 is 
not more than 24 hours in Fiscal Year 2001-2002, and 
if an individual uses 24 hours or less of sick leave in 
Fiscal Year 2001-2002, then he or she will be entitled 
to cash out a total of 50 hours of accrued sick leave 
during that same fiscal year. 

Such payments by the City to the covered employee are 
not considered as part of an employee's salary for the 
purpose of computing retirement benefits. 

Effective July 1, 2002, the Wellness Program would be 
eliminated and replaced by the Pilot Wellness Incentive 
Program, which is consistent with other existing MOUs 
between the City and employee organizations. According 
to Ms. Villagomez, this Pilot Wellness Incentive Program 
would be a one-year pilot, effective July 1, 2002. Ms. 
Villagomez states that DHR will evaluate the 
effectiveness of the Pilot Wellness Incentive Program at 
the end of one year and continuation of the Wellness 
Incentive Program will be subject to re-negotiation during 
the last year of the term of the MOU. 

Under the proposed MOU, covered employees would no 
longer be able to cash out sick leave while in active status 
beginning July 1, 2002. Rather, covered employees would 
be able to receive a cash payment upon retirement for 
unused sick leave, based upon the employee's salary rate 
and years of service. Under the program, an eligible 
employee would be able to cash out unused sick leave 
hours upon retirement, equal to 2.5 percent times the 
number of whole years of continuous service, times the of 
accrued sick leave credits (up to a maximum of 1,040 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

28 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



hours for employees scheduled to work 40 hours per week 
and up to a maximum of 1,272 hours for employees 
scheduled to work 24 hour shifts), times an employee's 
base salary, exclusive of premiums or supplements, at the 
time of retirement. For example, an employee who retired 
with 20 years of service would receive a 2.5 percent credit 
per year of service times 20 years of service, equal to 50 
percent. Therefore, if the employee had an accrued sick 
leave balance of 500 hours upon retirement, then the 
employee would be paid for 50 percent of the accrued sick 
leave balance, equal to 250 hours. Such payments would 
still not be considered for the purpose of calculating 
retirement benefits. 

According to Ms. Levin, the existing Fire Department's 
Wellness Program cost the City $19,095 in Fiscal Year 
2000-2001 for the covered employees. As shown in 
Attachment I, the Controller's Office estimates that the 
Pilot Wellness Incentive Program, effective July 1, 2002, 
would result in additional costs to the City of $34,065 in 
Fiscal Year 2002-2003. Also, as noted in Attachment I, 
only one of the six employees eligible for retirement, out of 
the 12 covered employees, plans to retire in Fiscal Year 
2002-2003. 

MEA - Police 

Under the previous MOU and for the first year of the 
proposed MOU, or Fiscal Year 2001-2002, the Wellness 
Program entitles covered Police Department employees 
who accrue sick leave of at least 300 hours, and use 30 
hours or less of sick leave in a given year, to cash out 50 
hours of sick leave accrued during that fiscal year. Such 
payments by the City to the covered employee are not 
considered as part of an employee's salary for the purpose 
of computing retirement benefits. 

Effective July 1, 2002, the existing Wellness Program will 
cease and a Pilot Wellness Incentive Program similar to 
the Pilot Wellness Incentive Program for the MEA - Fire 
mentioned above will begin. Under the program, an 
eligible employee would be able to cash out unused sick 
leave hours upon retirement, equal to 2.5 percent times 
the number of whole years of continuous service, times 
the of accrued sick leave credits (up to a maximum of 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

29 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



1,040 hours), times an employee's base salary, exclusive of 
premiums or supplements, at the time of retirement. Such 
payments would still not be considered for the purpose of 
calculating retirement benefits. 

According to Ms. Levin, the existing Police Department's 
Wellness Program cost the City $13,217 in Fiscal Year 
2000-2001 for the employees covered under this MOU. As 
shown in Attachment II, the Controller's Office estimates 
that the proposed new Wellness Incentive Program would 
save the City $13,217 in Fiscal Year 2002-2003 because 
none of the three eligible retirees has planned for 
retirement in Fiscal Year 2002-2003. 



Health Insurance 
MEA - Fire 

In the proposed MOU, the amount of dependent health 
care coverage paid by the City would remain the same as 
in the previous MOU at the greater of $225 per month or 
75 percent of the Kaiser Health Plan rate for two or more 
dependents. In Fiscal Year 2001-2002, 75 percent of the 
Kaiser Health Plan rate for two or more dependents 
would equal $279 per month. 

MEA - Police 

In the proposed MOU, the amount of dependent health 
care coverage paid by the City would increase. Currently, 
the City pays $225 per month for dependent health care 
coverage. Under the proposed MOU, the City's 
contribution would be the greater of $225 per month or 75 
percent of the cost of the Kaiser Health Plan rate for two 
or more dependents. This would then provide the same 
provision as contained in the MEA - Fire MOU. As noted 
above, in Fiscal Year 2001-2002, 75 percent of the Kaiser 
Health Plan rate for two or more dependents would equal 
$279 per month, which is an increase of $54 to the $225 
that the City previously paid for dependent health care 
coverage. 

As shown in Attachment II, the Controller's Office 
estimates that the increased dependent health care 
coverage for the MEA - Police would result in an 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

30 






Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

additional cost to the City of $2,592 in Fiscal Year 2001- 
2002. 

Provisions for Health Insurance under the proposed 
MOUs are consistent with other MOUs approved for City- 
employees by the Board of Supervisors, according to Ms. 
Villagomez. 

Estimated Costs: As shown in Attachments I and II provided by the 

Controller, the Controller estimates that the cumulative 
cost of implementing the proposed MOU between the City 
and the MEA - Fire, Bargaining Unit F3, is $401,460. 
The Controller's Office estimates that the cumulative cost 
of implementing the proposed MOU between the City and 
the MEA - Police, Safety Bargaining Units P-3-0, P-3-2 
and P-3-1, is $127,071. 

Therefore, the Controller estimates total cumulative costs 
of $528,531 for the two year period from July 1, 2001 
through June 30, 2003 for both of the proposed Fire and 
Police MOUs. 

The additional cost in Fiscal Year 2001-2002 of the two 
proposed MOUs of $139,941 ($101,234 from 
implementation of the MEA - Fire MOU and $38,707 
from implementation of the MEA - Police MOU) will be 
funded from the Salary and Benefits Reserve previously 
approved by the Board of Supervisors in the Fiscal Year 
2001-2002 budget. The Controller's Office advises that the 
additional cost in Fiscal Year 2002-2003 of the two 
proposed MOUs of $248,651 ($198,993 from 
implementation of the MEA - Fire and $49,658 from 
implementation of the MEA - Police) would be included in 
the City's Fiscal Year 2002-2003 budget, subject to 
approval of the Board of Supervisors. 

In addition, the Controller notes that if the City chooses 
to designate the birthday of Cesar Chavez as a paid 
holiday during the upcoming fiscal year, there would be 
additional overtime and lost productivity costs for these 
bargaining units, consistent with other MOUs approved 
by the City. The Controller's Office does not have an 
estimated cost for this potential additional paid holiday as 
of the writing of this report. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

31 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Comments: 



1. As previously noted, covered employees will be paid 
retroactively for all pay increases under the subject 
MOUs once the MOUs have been approved by the Board 
of Supervisors and the Mayor. 

2. As stated previously, the subject MOUs would be 
retroactive to July 1, 2001 and expire on June 30, 2003. 
Ms. Villagomez reports that the proposed MOUs would 
extend for two years to coincide with the expiration of the 
MOUs covering other uniform ranks at the Fire 
Department and Police Department, as well as the 
Sheriffs Department, all of which extend through June 
30, 2003. 



Recommendation: 



3. The two subject MOUs specify that the City is 
obligated to provide reasonable accommodations for 
persons with disabilities in order to comply with the 
provisions of the Americans with Disability Act, the Fair 
Employment and Housing Act and all other applicable 
Federal, State and local disability anti-discrimination 
statutes. Ms. Villagomez advises that this provision, 
which codifies existing practices with both the Fire and 
Police Departments, is not a new practice within the 
Departments and, therefore, does not result in any 
increased cost to the City. 

Approval of the proposed ordinances is a policy matter for 
the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

32 




HaH3-02 10:37an Frou-CCSF CONTROLLER OFFICE +41 5-554-74BB Attachment I 

Pa?e l ot 2 

CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLER 

Edward Harrington 
Controller 

REVISED 

March 13, 2002 

Ms. Gloria L:* Young, Clerk of the Board 

Board of Supervisors 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

Re: File Number 020369 

Amendment to the Memorandum of Understanding (MOLT) with the Municipal Executives 
Association - Fire 

Dear Ms. Young, 

In accordance with Ordinance 92-94, 1 am submitting a cost analysis of an amendment to the MOU 
between the City and County of San Francisco and the Municipal Executives Association - Fire. The 
amendment covers the period of July 1, 2001 through June 30, 2003, and affects 12 budgeted positions 
with an overall pay and benefits base of approximately SI. 69 million and a salary base of approximately 
$1.55 million. 

r Based on our analysis, the amendment will result in incremental costs of approximately $101,234 in 
FY 2001-2002, and $198,993 in FY 2002-2003. The amendment will result in cost increases of 
approximately 6.0% above the overall pay and benefits base (approximately 6.5% above base salaries) 
in FY 2001-2002 and approximately 11.8% above the overall pay and benefits base (approximately 
1 1.9% above base salaries) in FY 2002-2003. Please see Attachment A for specific cost estimates. 

In addition to the wage and benefit provisions in Attachment A, the MOU provides up to 100 hours of 
non-cash administrative leave for Airport staff only. This provision may result in overtime costs for those 
employees who are backfilled and in lost productivity for non-backfilled employees; however, we have not 
estimated a cost for this provision at this time. Also, there is a 7.5% premium for acting assignment pay; 
we do not have an estimate cost at this time. In addition, if the City chooses to make Cesar Chavez day a 
paid holiday during the upcoming fiscal year, there may be additional overtime and lost productivity costs 
for this bargaining unit. 

If you have any additional questions or concerns please contact me at 554-7500 or Pamela Levin of my 
staff at 554-7554. 

Sincerely, 




Edward M. Harrington 
Controller 

cc: Alice Villagomez, ERD 

Harvey Rose, Budget Analyst 



Ory Hall • 1 Dr. Curlton B. Cooillttt Tlace • Room JIG • Snn Franelico CA')4\Q2-*6<)4 FAX 415-554-" 



. / 



Marr13-Q2 1XI:37am From-CCSF CONTROLLER OFFICE +415-554-7466 Attachment I 

> Page 2,of 2 



Attachment A 

Municipal Executives' Association - Fire 
Estimated Costs FY 2001-2002 to FY 2002-2003 
Controller's Office 



Annual Cosls/fSavlnos) FY 2001-2002 FY 2002-2003 

Wage Increase 

4% on July 1 , 2001 , 4% on January 5, 2002 592,832 

4% on July 1, 2002, 4% on January 4, 2003 $133,877 

Additional Premiums and Benofits 

2% Petentlon Pay Effective July 1, 2002 16,880 

Pilot Wellness Program ** 

2.5% of Accrued Sick Leave Effective July 1 , 2002 

Wage-Related Fringe Increases 
Total Estimated Incremental Costs 
Annual Amount Above 2000-2001 Levol 
Cumulative Total Above 2000-2001 Provisions 
Incremental Cost % of 2000-2001 Total Pay & Benefits 
Incremental Cost % of Base Salary 



Accorttig to Flra Commission or March 7, 2002. only 1 out of Ine 3 ellgiDl* retirees naa planned for retirement. Total weilneae 
Incremental cost for all 6 allglbleale J3 17,006. Trie pilot wellness program replaces the previous program in wnlcn Ifie payout for FY 
2000-2001 was J19.CB5. 





34,065 


8,401 


14,171 


$101,234 


$198,993 


$101,234 


$300,227 




$401,460 


6.0% 


11.8% 


6.5% 


11.9% 



34 




CITY AND COUNTY OF SAN FRANCISCO 



Attac laaen t 
£age 



II 



1 o± 2 — 
OFFICE OF TH E CONTROLLER 

Edward Harrington 
Controller 



REVISED 



March 13, 2002 

Ms. Gloria L. Young, Clerk of the Board 

Board of Supervisors 

1 Dr. Carlton B. Goodletx Place 

San Francisco, C A 94102 

Re: File Number 020370 

Amendment to the Memorandum of Understanding (MOU) with the Municipal Executives 
Association - Police 



Dear Ms. Young, 

In accordance with Ordinance 92-94, I am submitting a cost analysis of an amendment to the MOU 
between the City and County of San Francisco and the Municipal Executives Association - Police. The 
amendment covers the period of My 1, 2001 through June 30, 2003, and affects 4 budgeted positions 
with ah overall pay and benefits base of approximately $602,000 and a salary base of approximately 
$552,000. 

.Based on our analysis, the amendment will result in incremental costs of approximately $38,707 in 
FY 2001-2002, and $49,658 in FY 2002-2003. The amendment will result in cost increases of 
approximately 6.4% above the overall pay and benefits base (approximately 7.0% above base salaries) 
in FY 2001-2002 and approximately 8.2% above the overall pay and benefits base (approximately 8.3% 
above base salaries) in FY 2002-2003. Please see Attachment A for specific cost estimates. 

In addition to the wage and benefit provisions in Attachment A, the MOU provides up to 100 hours of 
non-cash administrative leave. This provision may result in overtime costs for those employees who are 
backfilled and in lost productivity for non-backfilled employees; however, we have not estimated a cost 
for this provision at this time. In addition, if the City chooses to make Cesar Chavez day a paid holiday 
during the upcoming fiscal year, there may be additional overtime and lost productivity costs for this 
bargaining unit. 

If you have any additional questions or concerns please contact me at 554-7500 or Pamela Levin of my 
staff.at 554-7554. 

Sincerely, 



Edward M. Harrington 
Controller 



Alice Villagomcz, ERD 
Harvey Rose, Budget Analyst 



City HjiII • 1 Dr. Cnrtton B. Cocxlltit Place- • Room 316 • S»n Francisco CA 94112-4604 



FaX 41S-SS4-7. 



^-13-02 10:37aa Fron-CCSF CCNTWILES OFFICE +415-554-7465 g|||£^^^Ii: i 

/ 

Attachment A 

Municipal Executives' Association - Police 
Estimated Costs FY 2001-2002 to FY 2002-2003 
Controller's Office 

Annual Costs/fSavlngs) 

Wage Increase 

4% on July 1, 2001, 4% on January 5, 2002 
4% en July 1 , 2002, 4% on January 4, 2003 

Additional Premiums and Benefits 

2% Petention Pay Effective July 1, 2002 

Pilot Wellness Program ** 

2.5% of Accrued Sick Leave Effective July 1, 2002 

Health 

Increased Dependent Coverage to 75% of Kaiser Index 

Wage-Related Fringe Increases 

r Total Estimated Incremental Costs 

Annual Amount Above 2000-2001 Level 

Cumulative Total Above 2000-2001 Provisions 

Incremental Cost% of 2000-2001 Total Pay & Benefits 

Incremental Cost % of Base Salary 

«• According to Police Cammission. none ol the 3 eligible reU-ees has planned for retirement in FY 2Q02-2Q03. Total wellness Incremental 
co«l for all 3 ellgtbles is $210,63. However the pilot wellness program replaces the previous program In which the peyout for FY 2000-2001 
wasS13,217. 



FY 2001-2002 


FY 2002-2003 


$33,118 






$47,750 




10,084 




(13,217) 


2,592 




2,997 


5,030 


$38,707 


$49,658 


$38,707 


$88,364 




$127,071 


6.4% 


8.2% 


7.0% 


8.3% 



36 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Items 5 and 6 - Files 02-0252 and 02-0368 



Department: 
Item: 



Amount: 



Source of Funds: 



Mayor's Office of Public Finance 

Item 5 - File 02-0252: Resolution (a) approving the form 
of, and authorizing the execution and delivery by the City 
and County of San Francisco of Equipment Lease 
Supplement No. 9, between the City and County of San 
Francisco Finance Corporation, a nonprofit corporation, 
as lessor, and the City and County of San Francisco, as 
lessee, with respect to equipment to be used for City 
purposes, and providing for the related Certificate of 
Approval and a continuing Disclosure Certificate; (b) 
approving the issuance of Series 2002A Lease Revenue 
Bonds by said nonprofit corporation in an amount not to 
exceed $9,000,000; (c) providing for reimbursement from 
the Lease Revenue Bonds to the City of certain 
expenditures advanced by the City's General Fund and 
incurred prior to the issuance of Series 2002A Lease 
Revenue Bonds; (d) providing for the execution of 
documents in connection therewith; and (e) ratifying 
actions previously taken. 

Item 6 - File 02-0368: Ordinance appropriating 
$8,420,000 from the sale of lease-revenue bonds by the 
San Francisco Finance Corporation to fund the purchase 
of equipment for the City. 

Not to exceed $9,000,000 

Lease Revenue Bond Proceeds 



Description: 



In June of 1990, San Francisco voters approved 
Proposition C, a Charter Amendment which authorized 
the Board of Supervisors to approve, without further voter 
approval, lease-financing of equipment purchases for the 
City through a nonprofit public benefit corporation, the 
San Francisco Finance Corporation. The equipment 
leased by the City is purchased by the San Francisco 
Finance Corporation with the proceeds of lease revenue 
bonds. 

According to Ms. Nadia Sesay of the Mayor's Office of 
Public Finance, the City has issued lease revenue bonds 
for the procurement of equipment on an annual basis 
since FY 1990-91, with the exception of FY 1996-97 and 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

37 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



FY 2000-2001. The Mayor's Office is now requesting 
authorization to issue up to $9,000,000 in City and 
County of San Francisco Corporation Lease Revenue 
Bonds, Series 2002A ("Series 2002A Lease Revenue 
Bonds"), for the acquisition and installation of equipment 
previously approved by the Board of Supervisors in the 
FY 2001-2002 budget in the amount of $7,203,985. The 
FY 2001-2002 budget, as finally adopted by the Board of 
Supervisors, included a total of $16,561,252 in cash 
equipment purchases. 

Subsequently, in November of 2001, the Mayor's Director 
of Finance, Mr. Ben Rosenfield, advised the Finance 
Committee that the Mayor's Office, subject to Board of 
Supervisors approval, would lease finance some of the 
equipment previously approved by the Board of 
Supervisors in the FY 2001-2002 budget in order to 
reduce the City's cash outlay and spread out the City's 
equipment expenditures to partially alleviate the 
$60,000,000 to $100,000,000 revenue shortfall projected 
for FY 2001-2002. 

Using the Series 2002A Lease Revenue Bonds would 
spread out the cost of the equipment over the life of the 
bonds, or five years, instead of purchasing the equipment 
outright in FY 2001-2002 and would result in a savings in 
the FY 2001-2002 General Fund Budget of $7,203,985. 

Interest rates on lease revenue bonds issued by nonprofit 
corporations are generally lower than the interest on 
other financing instruments, because of the tax-exempt 
status of investments in non-profit corporations. Charter 
Section 9.108 requires that the San Francisco Finance 
Corporation not issue lease revenue bonds for equipment 
purchase unless the Controller certifies that the interest 
costs to the City would be lower through the San 
Francisco Finance Corporation than through the other 
financing instruments such as third party vendors. 
Under the proposed resolution, the Controller is required 
to certify that the interest rates are lower through the 
San Francisco Finance Corporation prior to the sale of the 
proposed Series 2002A Lease Revenue Bonds. According 
to Ms. Pamela Levin of the Controller's Office, the 
Controller has certified that the interest rates to the City 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

33 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



would be lower through the San Francisco Financing 
Corporation than through other financing instruments 
(see Comment No. 5). 

In accordance with Charter Section 9.108, the total 
outstanding indebtedness of the San Francisco Finance 
Corporation may not exceed a principal amount of $20 
million at any given time beginning in FY 1990-1991, 
with the limit increasing by five percent in each 
subsequent fiscal year. The maximum amount of 
allowable indebtedness in FY 2001-2002 for the lease 
financing of equipment is $34,206,787 according to Ms. 
Sesay. 

The Board of Supervisors has previously authorized the 
issuance by the San Francisco Finance Corporation of up 
to $83,369,707 in lease revenue bonds, of which 
$75,630,000 was actually issued, to finance the purchase 
of equipment, as follows: 



Fiscal Year 


Authorized Lease Revenue Bonds 


1990-91 


$ 7,304,707 


1991-92 


Up to 10,000,000 


1992-93 


Up to 10,200,000 


1993-94 


Up to 7,000,000 


1994-95 


Up to 6,500,000 


1995-96 


Up to 7,065,000 


1996-97 





1997-98 


Up to 14,000,000 


1998-99 


Up to 11,500,000 


1999-00 


Up to 9,800,000 


2000-01 





TOTAL 


Up to $83,369,707 



As noted above, the San Francisco Finance Corporation 
has been authorized to issue up to $83,369,707 since FY 
1990-1991 in lease revenue bonds to procure equipment 
on behalf of the City. According to the Mayor's Office of 
Public Finance, the actual amount of lease revenue bonds 
issued by the San Francisco Finance Corporation, the 
amounts which have been repaid, and the outstanding 
indebtedness as of April 1, 2002 will be as follows: 

Series 1991A Bonds 

Lease Purchase Revenue Bonds Issued $7, 020, 000* 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

39 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Repayment to Date 7.020.000 

Outstanding Indebtedness: Series 199 1A: $ 

Series 1992A Bonds 

Lease Purchase Revenue Bonds Issued $5,555,000* 

Repayment to Date 5.555.000 

Outstan din g Indebtedness: Series 1992A: 

Series 1993A Bonds 

Lease Purchase Revenue Bonds Issued $10,200,000* 

Repayment to Date 10.200.000 

Outstanding Indebtedness: Series 1993A: $0 

Series 1994A Bonds 

Lease Purchase Revenue Bonds Issued $6,850,000* 

Repayment to Date 6.850.000 

Outstanding Indebtedness: Series 1994A: 

Series 1995A Bonds 

Lease Purchase Revenue Bonds Issued $6,075,000* 

Repayment to Date 6.075.000 

Outstanding Indebtedness: Series 1995A: 

Series 1996A Bonds 

Lease Purchase Revenue Bonds Issued $7,065,000* 

Rep aym e nt to D ate 7.065.000 

Outstanding Indebtedness: Series 1996A: 

Series 1997A Bonds 

Lease Purchase Revenue Bonds Issued $13,715,000* 

Repayment to date 9,690.000 

Outstanding Indebtedness: Series 1997A: 4,025,000 

Series 1998A Bonds 

Lease Purchase Revenue Bonds Issued $10,835,000* 

Repayment to Date 8.595.000 

Outstanding Indebtedness: Series 1998A: 2,240,000 

Series 1999A Bonds 

Lease Purchase Revenue Bonds Issued $8,315,000* 

Repayment to Date 3.610.000 

Outstanding Indebtedness: Series 1999A: 4.705,000 

Projected Total Outstanding Indebtedness 

on April 1. 2002 $10,970,000 

Total Maximum Allowable Indebtedness for 

FY 2001-2002 $34.206.787 

Total Allowable Indebtedness Which Will Still 

Be Available as of April 1, 2002 $23,236,787 

* Total amount issued is $75,630,000 

As noted in the table above, as of April 1, 2002, the 

projected amount of outstanding indebtedness is 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



$10,970,000, resulting in an available balance of 
$23,236,787 in debt capacity for equipment lease 
financing in FY 2001-2002. 

Item 5 -File 02-0252: 






The proposed resolution would authorize the issuance of 
new Series 2002A Lease Revenue Bonds in FY 2001-2002 
in an amount not to exceed $9,000,000, which is within 
the unused debt capacity for equipment lease financing 
under Charter Section 9.108 of $23,236,787 for FY 2001- 
2002. Ms. Sesay estimates that the Series 2002A Lease 
Revenue Bonds will be sold on a competitive basis on or 
about April 24, 2002, subsequent to Board of Supervisors 
approval of this proposed resolution. 

Ms. Sesay reports that, subsequent to authorization of the 
proposed resolution, the San Francisco Finance 
Corporation will sell bonds to prospective investors and 
will purchase the equipment on behalf of the City using 
the proceeds from the lease revenue bond funds. City 
departments will then use their budgeted FY 2002-2003 
equipment lease funds to make the required annual lease 
payments to the San Francisco Finance Corporation, 
which in turn will use such funds to repay the principal 
and interest on the lease revenue bonds. 

According to Ms. Sesay, the bond trustee for the San 
Francisco Finance Corporation will act as a bank for 
equipment purchases. Ms. Sesay explains that various 
City departments will budget the annual lease payment 
within their FY 2002-2003 departmental budgets, which 
are subject to approval of the Board of Supervisors. Ms. 
Sesay reports that the total amount of the annual lease 
payments for the proposed Series 2002A Lease Revenue 
Bonds in FY 2002-2003 is approximately $994,238. A 
total of $9,078,104, including principal of $8,420,000 and 
interest of $658,104, would be repaid over the five year 
term of the lease revenue financing for the equipment 
listed by each applicable City Department in Attachment 
I, provided by Ms. Sesay. As stated above, such 
equipment was previously approved by the Board of 
Supervisors in the FY 2001-2002 budget. The $8,420,000 
in lease revenue bonds will be fully redeemed by October 
of 2007, according to Ms. Sesay. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

41 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



This proposed resolution also provides for (a) the payment 
of bond issuance costs related to the proposed issuance of 
the Series 2002A Lease Revenue Bonds which are 
incurred prior to the actual date of issuance, (b) the 
execution of documents needed to implement the proposed 
resolution, and (c) the ratification of actions previously 
taken. 

The annual budgets of City departments must include the 
amount of the City's annual lease-purchase payments 
(including principal and interest) for equipment procured 
through the San Francisco Finance Corporation. Since 
these payments are required under the terms of the lease- 
purchase agreement with the San Francisco Finance 
Corporation, the annual payments become fixed costs of 
City departments for the term of the lease revenue bond 
repayment period, once the equipment has been procured 
and acquired by the San Francisco Finance Corporation. 
As noted above, City departments will make lease 
payments to the San Francisco Financing Corporation, 
which in turn will use such funds to repay the bond funds. 

Item 6 - File 02-0368: The proposed ordinance would 
appropriate the proceeds from the sale of the Series 
2002A Lease Revenue Bonds in the amount of $8,420,000 
to finance the purchase of the equipment listed in 
Attachment I. As shown in Attachment I, total 
equipment costs are $7,203,985. As noted above, this 
equipment was previously approved by the Board of 
Supervisors in the final FY 2001-2002 budget. The 
proceeds from the sale of the Series 2002A Lease Revenue 
Bonds would be appropriated as follows: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

42 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Equipment Costs $7,203,985 

Required Reserve Fund 1 842,000 

Bond Issuance Costs 205,511 

Capitalized Interest 2 168,504 

TOTAL $8,420,000 

Comments: 1. Attachment I, provided by Ms. Sesay, contains a list of 

the equipment to be acquired, including (a) the applicable 
departments, (b) the number of units, and (c) the 
equipment costs, as previously approved by the Board of 
Supervisors in the FY 2001-2002 budget. 

2. The actual interest rate to the City on the proposed 
equipment lease revenue bonds cannot be determined 
precisely, because the interest rate will depend on 
prevailing financial market interest rates when the Series 
2002A Lease Revenue Bonds are actually sold, according 
to Ms. Sesay. Interest costs will also vary for each 
equipment item purchased based on the number of years 
in the repayment period for the item, which cannot exceed 
the useful life of the equipment or the five-year term of 
the proposed lease revenue bonds. 

Ms. Sesay estimates that, if the proposed Series 2002A 
Lease Revenue Bonds are sold in a principal amount of 
approximately $8,420,000 at an estimated annual interest 
rate of 3.3 percent (based on current financial market 
interest rates), and if they are based on the expected 
repayment period of five years, the City's total principal 
and interest cost would be approximately $9,078,104 over 
the five-year life of the Series 2002A Lease Revenue 
Bonds. Based on these estimates, as previously noted, the 
City's costs over the life of the Series 2002A Lease 
Revenue Bonds would be $8,420,000 in principal and 



1 Lease Revenue bonds have a legally required Reserve Fund equal, in this case, to 10 percent of the 
principal amount of the bonds. 

2 Pursuant to State law, the City cannot make any interest payments on lease revenue bonds until 
the City has received the equipment. However, interest on the lease revenue bonds begins accruing 
when the bonds are sold regardless of when the equipment is eventually purchased and received by 
the City. Therefore, capitalized interest, estimated in the amount of $168,504, must be paid from 
proceeds of the Series 2002A Revenue Lease Bonds until such a time as the equipment is actually 
received by the City and interest payments can be made from funds appropriated in the City budget. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

43 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



$658,104 in interest costs, for a total cost of $9,078,104 
over five years. 

3. The proposed resolution would provide for a 
Continuing Disclosure Agreement. According to Ms. 
Sesay, Federal law requires all cities and counties, that 
issue tax-exempt debt, to file an Annual Report with a 
national repository for the benefit of the investors. The 
Annual Report would contain the following: (1) the 
financial statements of the San Francisco Financing 
Corporation and the City; (2) the status of the project; (3) 
a summary of budgeted General Fund revenues and 
appropriations; (4) a summary of assessed valuation of 
taxable property; and (5) a summary of outstanding and 
authorized but unissued tax supported debt. 

4. The use of lease financing is equivalent to borrowing 
funds, with resultant interest costs, to purchase 
equipment. Since such financing requires fixed, 
mandatory lease payments by City departments over 
several years, the use of lease-purchases "locks in" 
departmental expenditures for future years resulting in a 
reduction in the amount of discretionary monies in the 
City's budget in future years. However, the Mayor's 
Office recommends the use of lease-financing for the 
City's major equipment purchases in order to spread the 
equipment costs over several years, corresponding to the 
City's beneficial use of the equipment. 

5. Under Charter Section 9.108, the Controller is 
required to certify, prior to the sale of the proposed Series 
2002A Lease Revenue Bonds, that the interest rates on 
the proposed lease revenue bonds are lower to the City 
through the San Francisco Finance Corporation than 
through other financing instruments. Ms. Levin advises 
that the Controller reviewed the estimated interest rates 
for comparable equipment lease-financing that would be 
charged by various companies, including GE Capital 
Public Finance Corporation, which would charge 4.35 
percent annually for a comparable five year term of 
borrowing, and IBM Global Finance Corporation, which 
would charge 5.9 percent annually for a five year term of 
borrowing. As shown in Attachment II, provided by Ms. 
Levin, the Controller has certified, in accordance with 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Charter Section 9.108, that the estimated annual interest 
rate for the lease revenue bonds issued by the San 
Francisco Corporation of 3.3 percent, based on a 
repayment of five years, is less than the interest rates 
that the surveyed companies would charge. 

6. According to Ms. Sesay, the proposed resolution (File 
02-0252) also provides for the reimbursement to the City's 
General Fund for expenditures made prior to the sale of 
the proposed lease revenue bonds and advanced by the 
General Fund. 

7. Page one, line four of the proposed ordinance (File 02- 
0368) should be amended to make a technical correction 
by replacing the phrase, " Mayor's Finance Corporation" 
with the " San Francisco Finance Corporation," so that the 
phrase reads, "Ordinance appropriating $8,420,000 from 
the sale of lease revenue bonds by the San Francisco 
Finance Corporation..." 

Recommendations: 1. Approve the proposed resolution (File 02-0252). 

2. In accordance with Comment No. 7 above, amend Page 
one, line four of the proposed ordinance (File 02-0368) by 
replacing the phrase, " Mayor's Finance Corporation" with 
the " San Francisco Finance Corporation," so that the 
phrase reads, "Ordinance appropriating $8,420,000 from 
the sale of lease revenue bonds by the San Francisco 
Finance Corporation..." 

3. Approve the proposed ordinance, as amended (File 02- 
0368). 



B OARD OF SUPERVISORS 



BUDGETANALYST 



FE3-25-2eS2 12:04 OFFICE OF PUBLIC 

City ahd'Coilnty of San Francisco Finance Corporation 
Lease Revenue Bands 
Equipment for FY 2002 



FINANCE 



Attachment I 









Unit 


Total 


Dept. 


Department 


Equipment 


Units 


Cost 


Cost 


Sub. Total 


AGE 


Cars-Replacement 


3 S 


16,308 S 


48,924 


S 48,924 


Animal Care 


Van 


1 


36,652 


36,652 


36,652 


DPH 


Methadone Mobile Van 


1 


100,000 


100,000 






Mammography Digitizer 


1 


175,000 


175,000 






Digital Pan/Ceph 


1 


52,748 


52,748 






AGFA Computed Radiography Sys 


1 


103,805 


103.805 






Prevac Steam Sterilizer - Sterile Proc 


1 


51,935 


51,935 






Prevacuum Steam Sterilizer - Surgery 


1 


37,382 


37,382 






Digital Chest Unit 


1 


503,200 


503,200 






Bispectral Index Monitor 


8 


9,406 


75,248 






Infant Incubators/Warmer 


9 


12,079 


108,711 






Potable X-Ray Unit 


3 


52,059 


156.177 






Echocardiography Machines 


1 


172,500 


172,500 






Food Pot Machines 


1 


86.800 


86,800 






Electrosurgery Units 


1 


52.731 


52,731 






Computer LAN Network 


1 


195.000 


195,000 






Anesthesia Machines 


1 


46.095 


46,095 


1,917.332 


DHS 


Moving Truck 


1 


38,394 


38,394 






Sedan, Midsize, Lev 


8 


22,555 


180,440 


218,834 


Fire 


AWSS - 3/4 ton Pickup truck 


2 


23,000 


46,000 






EMS -Ambulance 


8 


125,000 


1,000,000 






EMS Multi-casualty unit 


1 


24,000 


24,000 






Triple combo pumper 


2 


325.000 


650.000 






Aerial ladder truck 


1 


545,000 


545.000 






Emergency Generator - Station 7 


1 


100,000 


100.000 






Rescue/service truck 


1 


400,000 


400,000 






Mini-pumper 


2 


83,000 


166,000 


2,931,000 


Juvenile 


Van Ford 15 passenger 


1 


27,122 


27,122 


27,122 


Medical Examiner 


Tissue Proccessor 


1 


41.676 


41,676 


41,676 


Parking & Traffic 


CNG 3 Wheeled Vehicles 


16 


25,932 


414,912 






1/2 Ton Truck 


2 


33,666 


67,332 






1 Ton Truck 


1 


47,197 


47,197 






Cisco 4500 Switch 


1 


31,016 


31.016 






3/4 Ton Truck 


1 


24.390 


24,390 






CNG Sedans 


2 


22,173 


44,346 


629,193 


Police 


Genetic Analyzer 


1 


71.170 


71,170 






Marked vehicles 


10 


24.890 


248,900 






Unmarked vehicles 


23 


24,228 


557,244 






Property truck 


1 


30.023 


30,023 






Patrol Vans 


4 


19,929 


79.716 






Walk In freezer 


1 


90,000 


90,000 


1,077,053 


Sheriff 


12 Passenger Vans 


6 


26,475 


158,850 






Wheelchair Van 


1 


42.217 


42,217 






Full-size Marked Sedan 


3 


25.044 


75,132 


276,199 






138 


$ 


7,203,985 


$7,203,985 



46 



Jfifr Wl CITY AND COUNTY OF SAN FRAxNCISCO 



Attachment II 

OFFICE OF THE CONTROLLER 



Edward Harrington 
Controller 



March 11,2002 



Ms. Gloria L. Young, Clerk of the Board 

Board of Supervisors 

City Hall, Room 244 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

RE: File Number 02-0252 

2002 Finance Corporation Equipment 



Dear Ms. Young: 

Charter Section 9.108 requires the Controller to certify, prior to the sale of lease financing bonds, that the 
net interest costs to the City will be lower through the San Francisco Finance Corporation than through 
other financing instruments such a third party vendors. Under the proposed resolution approving the 
issuance of lease revenue bonds by the San Francisco Finance Corporadon, the estimated annual interest 
rate is 3.3% based on a repayment period of five years. 

I have reviewed interest information for a comparable amount and time period for several third party 
vendors. These included GE Capital Public Finance Corporation and IBM Global Finance Corporation. The 
interest rates offered by these companies are 4.35% and 5.98% respectively. Therefore the interest cost for 
the lease revenue bonds issued by the San Francisco Finance Corporation will be less than the interest cost 
through other third party vendors. 

If you have additional questions or concerns please contact me or Pamela Levin of my staff at 554-7500. 

Sincerely, 




Edward M. Harrin 
Controller 




cc: Harvey Rose, Budget Analyst 



47 



> Dnnin (lh • Sil 



rx ojin-'.jAOj 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Item 7 - File 01-1773 

Note: At the Finance Committee meeting of February 27, 2002, the 
Committee released $221,000 out of the previously reserved funds of 
$253,237, with the remainder of $32,237 continued on reserved. 



Departments: 
Item: 

Amount: 
Source of Funds: 
Description: 



Department of Administrative Services (DAS) 
Department of Elections (DOE) 

Hearing to consider release of reserved funds in the 
amount of $32,237 for the Reapportionment 
Project. 

$32,237 

General Fund 

The total amount which was originally placed on 
reserve during the FY 2001-2002 budget for the 
Reapportionment Project was $253,237. On 
February 27, 2002, the Finance Committee 
released $221,000 of the $253,237 originally placed 
on reserve, to fund the costs of various consultants, 
computer software and monitors, training, staff 
salaries, materials and supplies, public 
announcements, public meetings, and 

miscellaneous expenses. Approval of that $221,000 
release left the current balance of $32,237 on 
reserve. 



Comments: 



At this time, as shown in the Attachment, the 
Elections Task Force on Redistricting is requesting 
the release of $15,898.50 for the Reapportionment 
Project to provide additional newspaper advertising 
in ethnic media ($5,898.50) and to provide 
interactive redistricting software to allow the 
public to submit their own versions of district maps 
on individual CD-ROMs ($10,000). 

1. Ms. Elise Johnson of the Department of Elections 
advises that the existing $10,000 that is budgeted 
for newspaper advertising is earmarked for 
advertisements in the San Francisco Chronicle, 
Examiner, Bay View and SF Weekly. The proposed 
request for an additional $5,898.50 for advertising 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

in ethnic media would enable the Task Force to 
reach a wider and more diverse audience. Ms. 
Johnson advises that the figure of $5,898.50 for 
advertising is not based on actual advertising cost 
information but was determined based on 
subtracting the $10,000 contract cost for the 
installation of the interactive software program 
(see Comment No. 2 below) from the amount 
budgeted for "Miscellaneous Elections Task Force" 
costs of $15,898.50 ($15,989.50 less $10,000). Ms. 
Johnson further advises that the specific 
newspapers and the number of advertisements 
have not yet been finalized, but would include 
outreach to the gay and lesbian, Hispanic and 
Asian communities. 

2. Ms. Johnson advises that the proposed request to 
release $10,000 would result in the Department 
instituting interactive software, whereby 
informational CD-ROMs are distributed to 
members of the public, enabling them to create 
• various alternative versions of district boundary 

maps. According to Ms. Johnson, such maps could 
enable the public to provide more input into the 
redistricting process. Ms. Johnson advises that, if 
the proposed request is approved, a $10,000 
contract would likely be awarded on a sole source 
basis to Moose Point, a vendor who specializes in 
such mapping systems. As of the writing of this 
report, Ms. Johnson was not able to provide the 
hours and hourly rates for the subject contract. 

Recommendation: Although, the Budget Analyst believes that this 

$15,898.50 request appears reasonable based on 
the Departmental explanations provided, we 
consider approval this request to be a policy matter 
for the Board of Supervisors because (a) the hours 
and hourly rates for the contract to install the 
interactive software program were not available as 
of the writing of this report and, (b) the amount 
budgeted for advertising is not based on actual 
advertising cost information. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

49 



ELECTIONS TASK FORCE 

ON REDISTRICTING 




Attachment 
_ r .Page 1 of 2 

Gwenn Craig, Chair 
John Trasvina, Vice-Chair 
David Bisho 
Claudine Cheng 
Herbert Donaldson 
Bowman Leong 
Quintin Mecke 
John Murray 
Rebecca Prozan 



March 13,2002 



Ms. Debra Newman 
Budget Analyst's Office 
Room 244 
San Francisco City Hall 



Supervisor Peskin 

Supervisor Daly 

Supervisor Maxwell 

Tammy Haygood, Director, Department of Elections 



Dear Ms. Newman, 



As presented at the Finance Committee meeting of March 13, 2002, the San Francisco Elections Task 
Force on Redisricting requests the release of 515,898.50 in previously reserved funds. At the request of 
Supervisor Peskin, this memo will serve as an explanation of how these funds will be used. This item has 
been continued to the March 20, 2002 Finance Committee meeting. 

The 515,898.50 is requested, pending Finance Committee approval, for the following line items: 

5 5,898.50 Newspaper advertising, to include more ethnic media 

510,000.00 Interactive Redistricting Software 

(This software would allow members of the public to submit their own versions of district 
maps through the use of individual CD-ROMS, which would be made available at 
community meetings.) 

In addition, please find attached the amended Task Force on Redistricting budget, with a totai amount of 
5238,902.36. The original reserve budget was 5253,237.00, which under its own analysis, the Task 
Force reduced to the 5238,902.36 figure. 

If you have any questions regarding this request, please contact Quintin Mecke, Task Force on 
Redistricting member, at 41 5-863-8847. Thank you for your consideration. 



50 



Attachment 
Page Z of 2 



REAPPORTIONMENT BUDGET 2002 



REDISTRICTING, REPRECINCTING & ELECTIONS TASK FORCE BUDGET CONSIDERATIONS 



Consultant 

Technical Consultant (RFP) 
Neighborhood Consultant/Mtg Facilitation 
Database/Communications/Consulting DIMSnet 
David Binder (Polling/Surveys) 



Approx. 300/hrs @ S 150.00/ hr per person 

S150/hr@40hrs 

Subtotal 



Computer/Software 

Computer/Monitor 

Software - MS Office/Redistrictine 

Training 

Tech Learning Center 
Customized Training 



2 - Elections Task Force/Kiosk 
2- Elections Task Force/Kiosk 



S6 1 .49 per student per day 
SlOO/hr 



2 students - 7 days 
5 hours 



Subtotal 



Staff 



Project Lead 

Assistant (2) Clerical/Data Entry/Testing 

Field Workers 

MIS Support 

City Attorney 

Overtime 



Adriana Cruz 

Gary Pettinger/John Martin 
Rick Pazmino 



1471 
2-1402 
2-1403 
1471 



per City Attorney's Office, no fee for services 



S1460bi-3mo. (18.25/hr) 

SlI44bi-3mo. (14.30/hr) 

S1596bi-2wks. (19.95/hr) 

SI460 bi-1.5 mo, (18.25/hr) 



Subtotal 



Supplies 



Paper/envelopes 

Postage/messenger/Express Delivery 

Copying Cost/Color Copies 

Misc. 

Graphics 

Printing Cost 



Elections Task Force 
Elections Task Force 
Elections Task Force 
Elections Task Force 

2000 Citywide maps 

500 Sup dist maps (1 1 dist) 



Public Announcements 

Newspapers/Advertising Reapportionment Announcements, 1/2 page ads 

Meeting Announcements Elections Task Force S19.067 line x 275 

Public Outreach (Flyers/Mailings/ Contact Community Organizations), Translation Fees 



Subtotal 

lines (Chr) 
Subtotal 



Public Meetings 

Facilities Rental Costs ( Min. 1 1 Dist.) Elections Task Force 
City Watch Elections Task Force 

City Hall Meetings -S450.00 for first 3 hrs. 

OrfSite Meetings - SI 125.00 for first 2 hrs. 
Website Elections Task Force 



Park&Rec/Schools No Fees 

x 9 meetings 
x 1 1 meetings 



Subtotal 



Members 

Miscellaneous 
Refreshments (for Public) 



Elections Task Force 
Elections Task Force 




S4,000.00 
SI .500.00 
S5,500.00 

S860.86 

S500.00 

Sl.360.86 



SS.760.00 
S 13,728.00 

S3.192.00 

S4.380.00 
SO.OO 

S4.216.50 
S34.276.50 



S2.400.00 
S750.00 
5400.00 

SI, 200.00 
S500.00 

S2.000.00 

S3.200.00 
S10.450.00 



SI 0,000.00 

S5.241.50 

S30,000.00 

S45.241.50 

SO.OO 

S4.050.00 
SI 2,375.00 
SI 5.000.00 
S31.425.00 

S15.898.50 

S250.00 

S16.148.50 



JGRAND TOTAL 



| S238.902.36 



Last Revised 3/1 2/2002 



51 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Item 8 - File 02-0248 



Department: 
Item: 



Amount: 



Department of Elections 

Supplemental appropriation ordinance for $3,858,870 from 
the General Fund Reserve and re appropriating $1,800,000 
from the lease-purchase of election equipment for a total of 
$5,658,870 to fund salaries, fringe benefits, other current 
expenses, materials and supplies and equipment for the 
Department of Elections. 

$3,858,870 General Fund Reserve 
1,800.000 Reappropriation from Equipment 
Lease-Purchase 
$5,658,870 Total 



Budget: 



Temporary Salaries $1,616,129 

Annual Vacation Payoff 4,836 

Overtime 521,593 

Holiday Pay 24,687 

Mandatoiy Fringe Benefits 280,241 

Poll Worker and Polling Place Expenses 558,307 
Professional and Specialized Services Contracts 226,641 

Maintenance - Buildings & Improvements 3,279 

Maintenance Equipment Contract 228,393 

Rents & Leases - Bldgs & Structures 47,157 

Rents & Leases - Equipment 269,431 

Other Current Expenses 861,159 

Judgements - Legal Fees 11,652 

Taxes, Licenses and Permits 1,347 

Materials and Supplies 52,433 

Equipment Loan Payment 374,767 

Services of Other Departments 485,153 

Interdepartmental Recoveries 91,665 

Total $5,658,870 



Description: 



The proposed supplemental appropriation request for 
$5,658,870 would (a) appropriate $3,858,870 of additional 
General Fund Reserve for the Department of Elections and 
(b) reappropriate $1,800,000 of previously appropriated 
Department of Elections funds that were initially intended 
to partially pay for the outright purchase of a new elections 
system from Elections Systems and Software, Inc. (ES&S). 
Instead this system is being financed over a five-year 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



period as previously authorized by the Finance Committee 
(File 01-0836). 

As noted above in the Budget Section and discussed below, 
the proposed supplemental appropriation includes 
Equipment costs of $374,767, which represents the second 
loan payment for the current fiscal year to acquire the 
ES&S election system. 



Permanent Salaries 
Temporary Salaries 
Total 



As shown above in the Budget, the total requested 
$5,658,870 of additional funds would be used for various 
salary, contracts, maintenance, leases, equipment, 
materials and supplies, services of other departments and 
various other current expenses. In general, these additional 
expenses are being incurred by the Department of Elections 
due to (a) greater than anticipated expenses in the 
November of 2001 election, (b) a December of 2001 run-off 
election for the City Attorney's Office for which funds were 
not included in the FY 2001-2002 budget (see Attachment I 
which identifies the $1,947,834 in costs associated with the 
December of 2001 City Attorney run-off election, (c) 
additional expenses resulting from Proposition E, which 
included the establishment of a new Elections Commission 
to oversee the Department of Elections and which was 
approved in November of 2001, and (d) greater than 
anticipated expenses in the March 5, 2002 election. 

Specifically, the Department is requesting the following: 

Temporary Salaries ($1,616.129) 

The Department is requesting an additional SI, 616, 129 to 
pay for the increase in Temporary Salaries, which would be 
offset by a projected surplus of $534,144 in Permanent 
Salary funds, in FY 2001-02, as follows: 



Budget 
$1,405,144 



Actual 
Expenses 

(thru 
2/15/02) 
$469,581 



Projected 

Expenses 

(thru 6/30/02) 

$871,000 



Projected 
Surplus 
(Deficit) 

$534,144 



900.000 1.609.221 3.050.273 (2.150.273) 

$2,305,144 $2,078,802 $3,921,273 ($1,616,129) 

As shown in Attachment II, and summarized in the Table 
above, the Department has already expended $1,609,221 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

53 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

for Temporary Salaries, which is $709,221 or 79 percent 
more than the budgeted Temporary Salary funds of 
$900,000. As shown in Attachment I, an estimated 
$731,265 of Temporary Salary and Overtime expenses were 
incurred as a result of the December of 2001 City Attorney 
Runoff Election. Mr. Minasian advises that an additional 
approximately $70,000 of the Temporary Salary 
expenditures resulted from the need to hire Field Election 
Deputies (FEDs) for the March of 2002 election, due to 
Proposition E, rather than relying on volunteer City FEDs, 
as was done in the past (see Comment No. 1). In addition, 
$25,000 of the projected expenditures are for a Secretary for 
the new Elections Commission (see Comment No. 2). 
Overall, as shown above, the Department anticipates 
spending an estimated $3,050,273 for Temporary Salaries 
in FY 2001-2002, which is $2,150,273 or 239 percent more 
than the $900,000 originally budgeted. 

In contrast, as shown above, the Department is 
underspending by $534,144 or 38 percent less than their 
budget of $1,405,144 for Permanent Salaries, because the 
Department of Elections has not filled 11.2 FTEs of their 
total 24 FTE permanent budgeted positions, or a vacancy 
factor of 47 percent. Instead, the Department has continued 
to use temporary staff to perform the duties of the 
permanently budgeted positions. This is a recurring 
problem for the Department, and similarly resulted in 
significant overspending of Temporary Salaries and 
underspending of Permanent Salaries in previous years. To 
address this issue of overspending for Temporary Salaries, 
the Department proposed to reorganize the overall 
Department's management and requested and received 12 
substitutions and 9.0 additional new FTE permanent 
positions in the current FY 2001-2002 budget. However, as 
demonstrated by the requested supplemental appropriation 
and summarized in the Table above, this reorganization did 
not result in the ability of the Department to control its 
Temporary Salary expenditures (see Comment Nos. 1, 2 
and 3). 

Annual Vacation Payoff ($4.836) 

The Department is requesting $4,836 for a one-time 
vacation payoff resulting from the retirement of a 
Department of Elections employee. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

54 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Overtime (8521.593) 

The Department is requesting $521,593 for Overtime 
expenditures, as shown below: 

Actual 

Expenses Projected Projected 

(thru Expenses Surplus 

Budget 2/15/02) (thru 6/30/02) (Deficit) 

$200,000 $546,593 $721,593 ($521,593) 

Although the Department of Elections anticipates 
overspending their Temporary Salary budget by 239 
percent, as discussed above, the Department is also 
projecting Overtime expenses totaling $721,593 or 261 
percent more than the $200,000 originally budgeted. Yet 
despite the Budget Analyst's finding that actual Temporary 
Salaries for FY 2001-2002 will exceed budgeted Temporary 
Salaries by 239 percent, Mr. Ara Minasian of the 
Department of Administrative Services advises that this 
extraordinary use of Overtime was necessary because the 
Department of Elections was unable to recruit and 
supervise sufficient Temporary staff, thus necessitating the 
available Temporary staff to work additional hours. 
According to Mr. Minasian, the use of Overtime was 
compounded due to the various vacancies in the permanent 
management staff within the Department of Elections (see 
Comment No. 4). 

Holiday Pay ($24,687) 

The Department of Elections FY 2001-2002 budget does not 
include any funds for Holiday Pay because according to Mr. 
Minasian, in previous years, the Department of Elections 
covered such Holiday Pay expenses, through the 
Department's other salary accounts. However, Mr. 
Minasian advises that given the cost overruns incurred in 
the current fiscal year in the Department's other salary 
accounts, the Department cannot cover these Holiday Pay 
expenses, and has therefore separately accounted and 
requested additional direct funding for such Holiday Pay 
expenses. To date, the Department has incurred $19,687 of 
Hobday Pay expenses, primarily during October, November 
and December of 2001 and projects an additional $5,000 of 
Holiday Pay expenses through the end of the fiscal year for 
a total estimated need of $24,687. Mr. Minasian notes that 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



the FY 2002-2003 budget for the Department of Elections 
will likely include expenses separately budgeted for 
Holiday Pay. 

Mandatory Fringe Benefits ($280.241) 

The requested fringe benefit funds reflect the additional 
Temporary Salary, Overtime and Holiday Pay expenses 
that the Department projects incurring through the balance 
of the fiscal year. 

Poll Workers ($558.307) 

As shown in Attachment I, $410,661, or approximately 74 
percent of the requested $558,307 poll worker and polling 
place expenses resulted from the unanticipated December 
of 2001 City Attorney runoff election. Mr. Minasian advises 
that the remaining $147,646 or approximately 26 percent of 
the requested Poll Workers expenses results from the 
November of 2001 and March of 2002 elections. During 
these elections, the Department assigned additional poll 
workers to each polling site, provided additional hours of 
training for new and returning poll workers and provided 
incentive pay to the poll workers to deliver the ballots to 
the polling locations. According to Mr. Minasian, 
historically, the Department of Elections provided three 
poll workers and one Inspector at each polling site. 
However, Mr. Minasian advises that during the November 
of 2001 and the March of 2002 elections, the Department 
increased the number of poll workers to four, and one 
Inspector, for a total of five poll workers at each polling 
site, due to the complexity of the ballots during these 
elections. The costs for these additional poll workers were 
not included in the Department's FY 2001-2002 budget and 
had not been previously authorized (see Comment No. 5). 

Professional and Specialized Services Contracts 
($226.641) 

As shown below, the Department has now expended 
$329,176 of the budgeted $377,408 for professional and 
specialized services. However, the Department anticipates 
incurring a total of $604,049 for such expenses during the 
current fiscal year, which is $226,641, or 60 percent more 
than the amount budgeted. 



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March 20, 2002 Finance Committee Meeting 

Actual Total 



Expenses Projected Projected 

(thru Expenses Surplus 

Budget 2/15/02) (thru 6/30/02) (Deficit) 

$377,408 $329,176 $604,049 $226,641 

According to Mr. Minasian, the additional $226,641 results 
primarily from (a) three contracts for a total of $120,000 for 
public relations and communication services and (b) one 
contract for a total of approximately $100,000 for an 
elections consultant to assist the Department. Therefore a 
total of $220,000 of public relations and consulting 
contracts were awarded. The three public relations and 
communications consultant contracts, their contractual 
dates, hourly rates, and total estimated costs are: (1) 
Melissa A. Mooney dba M2PR, hired from October 15, 2001 
through November 15, 2001, at a rate of $125 per hour for a 
total of 140 hours, plus additional charges, for a total of up 
to $20,000; (2) Cynthia A. MacKenzie, hired from 
November 19, 2001 through March 31, 2002, at a rate of 
$140 per hour for a total of 320 hours, plus additional 
charges, for a total of up to $50,000; and (3) MacKenzie 
Communications, Inc., hired from November 30, 2001 
through March 31, 2002, at a rate of $225 per hour for a 
total of 200 hours, plus additional charges for a total of up 
to $50,000. Additionally, Mr. Minasian advises that in 
August of 2001, the Chief Administrative Officer hired Mr. 
Bill Jackson, who is retired from the San Mateo County 
Department of Elections, as a technical elections consultant 
to assist the Department at a maximum cost of $100,000. 
According to Mr. Minasian, to date, Mr. Jackson has billed 
the Department approximately $80,000 (see Comment No. 
6). 

Maintenance - Buildings & Improvements ($3,279) 

The Department did not budget any funds in FY 2001-2002 
for the building and improvement maintenance services. 
The requested $3,279 is for the costs to pay for 
maintenance of the elevator at 240 Van Ness Avenue, a 
City-owned approximately 5,000 square foot space the 
Department of Elections has been using on a temporary 
basis since October of 2001. The Department is not 
currently paying any lease costs for this space. 



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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Maintenance - Equipment ($228.393) 

The Department already budgeted the necessary $228,393 
to pay for the Department's Elections Systems and 
Software, Inc. (ES&S) maintenance contract services in FY 
2001-2002. However, Mr. Minasian advises that the 
previously budgeted $228,393 for the ES&S equipment 
maintenance services was instead spent for additional 
Other Current Expenses (see below), resulting in 
insufficient funds to pay the necessary $228,393 for the 
equipment maintenance contract with ES&S. 

Rents & Leases - Bldgs & Structures ($47,157) 

As shown below, the Department has already expended 
$63,811, or $13,811 more than the $50,000 budgeted for the 
entire fiscal year for rents and leases. However, the 
Department anticipates incurring a total of $97,157 for 
such expenses, which is $47,157, or 94 percent more than 
budgeted. 





Actual 


Total 






Expenses 


Projected 


Projected 




(thru 


Expenses 


Surplus 


Budget 


2/15/02) 


(thru 6/30/02) 


(Deficit) 


$50,000 


$63,811 


$97,157 


$47,157 



Mr. Minasian advises that these additional rental expenses 
were incurred due to (a) carryforward costs of $6,000 from 
the November and December of 2000 election costs for Pier 
45, (b) carryforward costs of $8,376 from the November and 
December of 2000 elections to rent polling places from the 
San Francisco Unified School District, (c) $6,800 for 
additional training classes at the Community College 
District, (d) a rent increase of $228 per month for seven 
months for the Pier 29 facility, or an additional $1,596 and 
(e) miscellaneous additional polling place rental fees (see 
Comment No. 7). 

Rents & Leases - Equipment ($269.431) 

As shown in Attachment II, the Department did not include 
specific budgeted funds for equipment rents and leases in 
their FY 2001-2002 budget, although through February 15, 
2002, the Department reports expending $114,831 for 
equipment rentals, of which an estimated $33,438 was a 
result of the December of 2001 City Attorney runoff 
election, as itemized below. As also itemized below, the 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Department anticipates expending an additional $154,600 
for equipment rents and leases as a result of the March 5, 
2002 election, including $115,000 for vehicle rentals for the 
March, 2002 election, as follows: 



December 2001 


March, 2002 


Run-off Election 


Election 


Vehicle Rentals $6,740 


$115,000 


Lighting 4,875 


2,200 


Restrooms 11,548 


10,400 


Tents 10,275 


10,000 


Computers 


9,000 


Eagles 


8.000 


Total $33,438 


$154,600 



Together, the already expended $114,831 and the projected 
$154,600 results in the requested total of $269,431 by the 
Department (see Comment No. 8). 

Other Current Expenses ($861.159) 

As noted above, the Department advises that previously 
budgeted costs, such as $228,393 for the ES&S Equipment 
Maintenance services contract were instead spent for 
additional Other Current Expenses that were incurred this 
fiscal year, resulting in insufficient funds to pay the 
necessary $228,393 for the equipment maintenance 
contract with ES&S. As a result, the Department has 
requested such additional funds as part of the proposed 
supplemental appropriation. In addition however, the 
Department reports that there is a further shortfall in 
Other Current Expenses, although the actual shortfall is 
larger than the amount being requested, since as noted 
above, some of the costs were allocated to other subobjects, 
such as Equipment Maintenance. For example, the 
Department reports that $1,540,156 of additional Other 
Current Expenses were needed due to (a) overexpenditures 
of $135,879 from the November of 2001 election due to a 2- 
card ballot, instead of the budgeted 1-card ballot; (b) 
$415,277 ($59,717 for mailing services, $59,899 for printing 
of voter information pamphlet, $147,723 for ballots, 
$134,280 for postage and $13,658 for advertising) of 
expenditures incurred from the December of 2001 City 
Attorney run-off election, which was not budgeted; (c) 
$69,000 of additional ballot storage expenses; (d) $20,000 of 
additional travel, training and other office expenses for the 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



new Elections Commission; (e) overexpenditures of 
$900,000 from the March 5, 2002 election due to the 
printing of 375 various forms of the ballots, which cost 
$1,800,000, rather than the budgeted $900,000 (see 
Comment No. 9). 

Judgements - Legal Fees ($11,652) 

Mr. Minasian reports that the Department has incurred 
legal expenses of $11,652 for services provided by Ms. Kay 
Lucas, a private attorney, who was working with Retired 
Judge Herbert Donaldson, who was hired by Mr. Bill Lee, 
the City's Administrative Officer, to investigate a 
Department of Election employee's allegations regarding 
payroll reports and the misuse of City funds. The results of 
this investigation by Ms. Lucas and Judge Donaldson found 
that there was no basis for such allegations. However, the 
Budget Analyst notes that the employee who made these 
allegations continues to be employed as a permanent 
employee by the Department of Elections at an annual 
salary of approximately $92,000 with estimated fringe 
benefit costs of $23,000, or total annual cost of 
approximately $115,000. 

Taxes, Licenses and Permits ($1,347) 

The Department is requesting a total of $1,347 including 
(a) $230 for permits for street fair booths used to recruit 
poll workers, Ob) $500 annual fee to the U.S. Postal Service 
to maintain a Business Reply Mail account, (c) $580 fee to 
the Department of Parking and Traffic for street closures 
on election day, and (d) $37 fee to the Police Department for 
a "sound" permit to have outdoor amplified music during a 
poll worker recruitment event (see Comment No. 10). 

Materials and Supplies ($52,433) 

The Department advises that through February 8, 2002, 
the Department expended $529,709 for Materials and 
Supplies and projects spending an additional $685,488 
through June 30, 2002, for total expenditures of $1,215,197. 
Some of the projected additional expenditures include: the 
purchase of new tables and chairs ($61,987), miscellaneous 
office supplies ($50,000), envelopes ($128,000), ballot pens 
($22,500), rice bags ($11,750), voting booths ($18,000), 
additional tables ($23,584), luggage carts ($28,000), 
shelving ($45,000), bar code readers ($5,550) and cell 
phones ($7,104) (see Comment No. 11). 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

Equipment ($374,767) 

The Department advises that these Equipment funds are 
for the second annual loan payment for Fiscal Year 2001- 
2002 to finance the purchase of the ES&S elections system. 
Under the five-year financing plan, which began on April 6, 
2000 and extends through June 1, 2005, at an interest rate 
of 5.18 percent, the Department will ultimately pay a total 
cost of approximately $3.7 million, including total interest 
expenses of approximately $500,000 over the five-year 
financing period. 

Services of Other Departments ($485.153) 

As shown in Attachment II, the Department anticipates 
needing an additional estimated $485,153 to pay other City 
departments for services provided to the Department of 
Elections. As detailed in Attachment II, although the 
Department budgeted $50,000 for the Department of 
Parking and Traffic (DPT) and $90,000 for the Department 
of Public Works (DPW), the expenses for DPT were 
incurred under Professional Services and the expenses for 
DPW were not incurred. Instead, the main reason for the 
additional requested funds is a result of the projected 
$710,366 of Overtime expenditures by the Sheriffs 
Department to provide security for the Department of 
Elections (see Comment No. 12). 

Interdepartmental Recoveries (891,665) 

The Department budgeted the recovery of $91,665 of 
revenues from the Employees Retirement Department and 
the Health Service System in the anticipation that each of 
these departments would require the Department of 
Elections to conduct an election in FY 2002-2003 for their 
Boards. However, Mr. Minasian advises that neither of 
these Department's Boards will be requiring an election in 
FY 2002-2003, such that the Department of Elections will 
not be recovering these funds this fiscal year. 

Comments: 1. In November of 2001, the voters of San Francisco 

approved Proposition E, a Charter Amendment which (a) 
creates an Elections Commission to oversee the 
Department of Elections, (b) charges the Sheriffs 
Department with elections security as well as transporting 
and safeguarding voted ballots for the elections and (c) 
prohibits the use of City employees, other than Department 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



of Elections employees, from staffing elections, unless this 
prohibition is specifically waived by the Elections 
Commission and the Board of Supervisors. 

Based on the Controller's cost estimates submitted in the 
Voter Information Pamphlet for Proposition E, the DOE 
previously relied on 66 volunteer Field Election Deputies 
(FEDs), provided by approximately 14 City departments, at 
a loss of productivity to these other departments, but at no 
cost to the DOE, to assist in conducting each election. 
Based on a total of approximately 650 polling locations, 
each City FED is responsible for overseeing and managing 
approximately ten polling places, and are critical on the 
day of the elections to ensure that each polling place opens 
on time, is adequately staffedand has sufficient supplies. 
The FEDs play a troubleshooting role throughout elections 
day. However, now, as stated above, Proposition E prohibits 
the use of such City FEDs, unless such a prohibition is 
specifically waived by the Elections Commission and the 
Board of Supervisors. The Elections Commission did not 
waive this provision or seek such a waiver from the Board 
of Supervisors. Instead, for the March 5, 2002 election, the 
DOE hired and trained new Temporary Salary workers as 
FEDs. As a result, the DOE is requesting an additional 
approximately $70,000 out of the requested $1,616,129 in 
Temporary Salaries for funds already expended to hire and 
train 102 FEDs at an estimated cost of $14.71 per hour for 
an average of 44 hours per FED. The Budget Analyst 
questions why the DOE did not request a waiver from the 
Elections Commission and the Board of Supervisors and 
instead hired 102 FEDs at an additional cost of 
approximately $70,000 for the March 5, 2002 election given 
that (a) Proposition E provided for a waiver of this 
provision (b) in prior years, the DOE relied on 
approximately 66 City employee to serve as FEDs, which is 
36 fewer FEDs than the 102 non-City employee FEDs that 
DOE actually hired and trained and (c) the Department 
knew it did not have sufficient funds to pay for this 
additional cost. 

2. The Department has included $25,000 for the balance of 
FY 2001-2002 in the Temporary Salary request for a new 
Elections Commission Secretary position. Ms. Joan 
Lubamersky of the Department of Administrative Services 
advises that the Department of Human Resources (DHR) 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



recently approved an AC35, Board Commission Secretary 
III for the Elections Commission, at an annual salary range 
of $65,364 to $79,456, plus fringe benefits of approximately 
25 percent or an estimated $100,000 annually which is 
comparable to the Port Commission's Secretary position. 
The Budget Analyst notes that, even if the requested 
Elections Commission Secretary position was quickly filled 
by April 1, 2002, at the recommended annual starting 
salary of $65,364, the DOE would only require an 
estimated $16,341, not $25,000 for the remainder of this 
fiscal year. Therefore, the Budget Analyst recommends 
reducing the requested Temporary Salary funds by $8,659, 
and the related fringe benefits by $2,165 which would 
provide sufficient funds to fill the Commission Secretary 
position as of April 1, 2002. Mr. Minasian advises that the 
DOE will likely request a new Commission Secretary 
permanent position in the FY 2002-2003 budget. The 
Budget Analyst will review that matter in the FY 2002- 
2003 budget. 

3. The Budget Analyst seriously questions the 
extraordinary use of Temporary Salaries by the 
Department of Elections. The Budget Analyst notes that in 
FY 2000-2001, when the Department had such 
extraordinary overexpenditures in Temporary Salaries, the 
Department incurred total Temporary Salary expenditures 
of $1,596,700, which was $746,267, or 88 percent more than 
the $850,433 initially budgeted and as a result, the 
Department recommended reorganizing the Department by 
substituting 12 employees and hiring 9 new employees. 
These changes appear to have worsened the Temporary 
Salary problem. As noted above, as of February 15, 2002 
the Department had already expended $1,609,221 for 
Temporary Salaries, which is $709,221 or 79 percent more 
than the budgeted Temporary Salary funds of $900,000 and 
based on the projections by the Department, DOE 
anticipates spending $3,050,273 for Temporary Salaries in 
FY 2001-2002, which is $2,150,273 or 239 percent more 
than the $900,000 originally budgeted this fiscal year. 

A review of the projected remaining levels of Temporary 
Salaries reveals that the Department plans to continue to 
maintain high levels of Temporary Salary employees 
through the end of Fiscal Year 2001-2002. During the 
March 5, 2002 election, the Department hired 274 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



temporary employees. According to the Department's 
projections, currently there are approximately 162 FTE 
permanent and temporary employees in the Department. 
Even by the end of this fiscal year, the Department 
anticipates maintaining 51 FTE permanent and temporary 
salary employees. The Budget Analyst notes that the 
Department's FY 2002-2003 budget only provides for a total 
equivalent of 42.4 FTE permanent and temporary salary 
positions, including during peak election periods. The 
Budget Analyst therefore seriously questions the 
justification of projecting such high Temporary Salary 
expenses during the remainder of the fiscal year and 
recommends a reduction of at least $267,926, or one-half of 
the projected Temporary Salary expenses for the balance of 
Fiscal Year 2001-2002 from the requested amount of 
$1,116,129, which would still provide $848,203 for 
Temporary Salaries. The Budget Analyst also recommends 
a reduction of an estimated $40,189 for the fringe benefit 
costs related to these Temporary Salaries. 

4. The Budget Analyst notes that in October of 2001, when 
the Department of Elections requested the release of 
$2,015,719 of reserve funds from the Finance Committee, 
Ms. Haygood reported that the Department's Overtime 
expenses were likely to be less than budgeted since 
Elections employees are not permitted to work any 
overtime hours unless the hours are specifically approved 
by the Director of the Department. The Budget Analyst 
therefore questions the amount of management oversight 
that was provided, given the number of vacant positions in 
the Department, the extraordinary large number of 
temporary employees hired, coupled with Overtime 
expenditures which are projected to be 261 percent more 
than budgeted. 

5. The Budget Analyst questions the Department's decision 
to hire and train additional poll workers for each of the 
elections without the prior funding authorization by the 
Board of Supervisors. As noted above, all of the poll worker 
expenses have already been incurred by the Department. 

6. In response to the Budget Analyst's inquiries regarding 
why the DOE retained three consultants at a cost of 
$120,000 to serve as public relations and communications 
specialists, Ms. Tammy Haygood, Director of Elections 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



forwarded Attachment III, a March 11, 2002 memorandum 
which was provided to Supervisor Daly. As noted in 
Attachment III, Ms. Haygood states that "It has become 
very obvious that the Department of Elections needs to 
improve and broaden the effectiveness, clarity, form and 
channels of its communications at all levels including to the 
general public, voters, City staff, media and the Board of 
Supervisors. Apart from my own perspective, this need was 
recently expressed to me by the members of the Rules 
Committee.... I believe that I am not only justified in hiring 
consultants to address these critical needs, but that I would 
be negligent if I were not to devote resources to this area 
right now." The communications and public relations 
contractual activities included production of a series of 
press releases and public service announcements, media 
information kits, media briefings and interviews and design 
of the DOE's website. 

The Budget Analyst notes that the funds to pay for these 
three public relations services agreements totaling 
$120,000 and the one agreement for technical elections 
consulting services for $100,000 were not included in the 
Department's budget, nor previously specifically authorized 
for funding by the Board of Supervisors. The Budget 
Analyst questions the justification for these four 
professional services contacts and considers approval of the 
entire $220,000 requested to fund these four contracts to be 
a policy matter for the Board of Supervisors. The Budget 
Analyst also recommends that $50,000 that is included in 
the requested supplemental appropriation for 
"miscellaneous" professional fees, that contains no 
supporting details, also be deleted from the subject request. 

A review of the Department's original budget and current 
budget reflects many changes and transfers of funds from 
one object or account to another. The Budget Analyst also 
notes that a review of the expenditures incurred by the 
Department indicate that the Department is incurring 
expenditures in various objects or accounts, although the 
funds for such expenditures are actually budgeted in other 
accounts. For example, the Department charged to their 
Professional and Specialized Services account (a) $87,073 to 
pay a temporary agency for Temporary employees, (b) 
$6,974 of van rental expenses and (c) $39,824 for the 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Department of Parking and Traffic to pick up ballots after 
the November and December of 2001 election. As a result, 
although such transfers are authorized by the Annual 
Appropriation Ordinance, it is extremely difficult to 
accurately determine how much the Department is actually 
expending in its various expense accounts since they 
consistently transferred monies from one account to 
another, subsequent to the Board of Supervisors having 
approved this budget. 

7. For this subject request, the Department has double- 
budgeted $4,669 for the property rent for Pier 29. The 
Department also included $10,000 of miscellaneous 
unidentified property rents in their projections, that are not 
justified. Therefore, the Budget Analyst recommends 
reducing the requested $47,157 for Rents & Leases by 
$14,669 ($4,669 plus $10,000) to $32,488. 

8. The proposed supplemental appropriation includes an 
estimated $115,000 to rent vehicles for the March 5, 2002 
election. Given this considerable expense, the Budget 
Analyst questioned the Department regarding the need to 
spend a projected $115,000 to rent various vehicles just for 
the March 5, 2002 election. In response, Mr. Lee advised 
the Budget Analyst that the Department actually expended 
approximately $185,000, or an estimated $70,000 more 
than is being requested in the subject supplemental 
appropriation, to rent various vehicles for the March 5, 
2002 election (See Attachment V which identifies the 
vehicles rented). 

Such vehicle rentals included $92,000 to rent 101 vans for 
an average period of two weeks per vehicle, or an average of 
$911 per van, for the Field Election Deputies (FEDs) to 
provide access to the various polling locations throughout 
the City. As noted above, the FED jobs were previously 
performed by other City department staff using their own 
vehicles. In addition, Mr. Lee advises that the Department 
incurred the remaining approximately $93,000 vehicle 
rental expenses to lease a total of 84 various trucks, vans, 
cars and other vehicles for other permanent and temporary 
staff to conduct voter outreach, provide election support, 
transport various ballots between locations, etc. The 
Budget Analyst questions (a) the actual need to rent 185 
(101 plus 84), vehicles at a total cost of $185,000 for the 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



March 5, 2002 election, (b) the extremely high cost of 
renting these vehicles and (c) why the vans were rented for 
an average period of two weeks each, when the FEDs only 
required these vehicles on election day. The Budget Analyst 
notes that the Controller's Office, in preparing the cost 
estimates included in the Voter's Information Pamphlet for 
Proposition E, identified a cost of approximately $800 (16 
vehicles at $50 per vehicle) for the Department of Elections 
to rent vehicles for the hired Field Election Deputies. The 
Controller's estimate of $800 is $184,200, or 99 percent less 
than the $185,000 now projected to be expended by the 
Department of Elections for such vehicles. 

The Budget Analyst would not have recommended approval 
of all the requested expenditures for vehicle rentals, if the 
subject request were submitted prior to the March 5, 2002 
election. However, given that these expenditures have 
already been incurred by the Department, the Budget 
Analyst considers approval of such extraordinary vehicle 
rental costs to be a policy matter for the Board of 
Supervisors. 

9. Regarding Other Current Expenses, the Budget Analyst 
questions spending an additional $69,000 for ballot storage 
expenses for the last six months of the fiscal year at an 
average cost of $11,500 per month. Mr. Minasian advises 
that these costs are high because the Department is 
currently using the City's secure file vendor to store the 
November, December and March ballots. In addition, the 
Department is using Pier 29, 240 Van Ness, and City Hall 
for various operations and storage. Ms. Haygood advises 
that many of the Department's problems result from the 
lack of consolidated space and reports that the Department 
is currently working with the Division of Real Estate to 
locate one consolidated site for the Department of Elections 
operations and storage needs. 

The Budget Analyst also questions the inclusion of $20,000 
of additional travel, training and other office expenses for 
the new Elections Commission, for which no details 
whatsoever were provided. The Budget Analyst notes that 
the Controller's statement in the November of 2001 Voter 
Information Pamphlet for Proposition E states that 
approximately $100,000 annually would be required to 
provide an Elections Commission Secretary and to cover 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

the cost of meetings, public notices, and other requirements 
of the Commission. As discussed above, an Elections 
Commission Secretary at an annual salary cost of $65,364 
to $79,456, including fringe benefits of approximately 25 
percent or a total annual cost of approximately $100,000 is 
also being requested. Therefore, the Budget Analyst 
recommends reducing the requested $20,000 for the 
Commission's expenses, for which no details were provided. 

Furthermore, as part of this supplemental appropriation, 
the DOE is requesting an additional $900,000 ($900,000 
initially budgeted but actual costs are $1,800,000) which 
resulted from the March 5, 2002 election due to the 
printing of 375 various forms of the ballots. The Budget 
Analyst requested that the Department provide the State 
ballot printing guidelines and the number of ballots printed 
and used by precinct for the March 5, 2002 election. As of 
the writing of this report, Ms. Haygood advises that the 
Department is still canvassing the ballots to determine the 
number of ballots distributed and used by precinct. 

10. The Budget Analyst questions the $1,347 in Taxes, 
Licenses and Permit expenses that are included in the 
proposed supplemental, since they appear to be regular, 
ongoing expenses of the Department that would typically 
have been included in the Department's annual budget 
request. Therefore, the Budget Analyst considers approval 
of these expenses to be a policy matter for the Board of 
Supervisors. 

11. In response to inquiries from the Budget Analyst 
regarding the cell phones purchased by the Department for 
$7,104, Mr. Lee advises that for the November and 
December of 2001 elections, the Department received 
approximately 500 free cell phones from Nokia and AT&T, 
for which the DOE paid the activation and use charges. Mr. 
Lee advises that AT&T had previously offered free 
activation and use of the free cell phones by the DOE, but 
after many of the cell phones were not returned to AT&T, 
the company began charging the DOE for activation and 
use of the phones. Mr. Lee advises that, after the December 
of 2001 election, he obtained an additional 200 cell phones 
for the DOE that were being discarded by the Police 
Department. Therefore, the DOE already had 
approximately 700 cell phones, when they decided to 

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Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



purchase an additional 150 cell phones at a cost of $7,104, 
for a total of 850 cell phones. Mr. Lee advises that these cell 
phones were given to each of the 650 Inspectors assigned to 
each polling place, the 102 Field Election Deputies and 
various other DOE staff to use during the March 5, 2002 
election. Mr. Lee reports that the activation and use 
charges for these cell phones is estimated to be 
approximately $50,000 for Fiscal Year 2001-2002. 

In response to the Budget Analyst's inquiry regarding why 
the Department needed additional tables and chairs, Ms. 
Haygood advised that the Department required ten 
additional precincts be opened for the March 5, 2002 
election and all of the precincts needed additional surface 
space due to the ballot volume. However, the Budget 
Analyst notes that the Department is requesting $85,571 
($61,987 plus $23,584) for such tables and chairs, or an 
average of $8,557 for each of the ten precincts. In response 
to inquiries from the Budget Analyst regarding why 
numerous other Materials and Supplies expenses, such as 
miscellaneous office supplies ($50,000), envelopes 
($128,000), ballot pens ($22,500), rice bags ($11,750), 
voting booths ($18,000), and luggage carts ($28,000) were 
also incurred without first obtaining funding authorization 
by the Board of Supervisors since these expenditures were 
in excess of the Department's budget, Ms. Haygood advises 
that such expenses were required due to the complexity of 
the March 5, 2002 election. The Budget Analyst considers 
approval of the requested $52,433 for Materials and 
Supplies to be a policy matter for the Board of Supervisors. 

12. Proposition E requires states that "The Sheriff shall be 
responsible for preserving the security and integrity of 
elections in all matters including but not limited to 
transporting all ballots and all other documents or devices 
used to record votes from the polls to the central counting 
location and providing security for the ballots until the 
certification of election results.... The Elections Commission 
shall send a copy of the approved security plan to the Board 
of Supervisors." Ms. Haygood advises that, to date, the 
Elections Commission has not sent a copy of an approved 
security plan to the Board of Supervisors, as required by 
Proposition E. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

69 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



As discussed above, the proposed supplemental 
appropriation includes $710,366 of Overtime expenditures 
by the Sheriffs Department to provide security for the 
Department of Elections. Attachment IV, provided by Ms. 
Jean Mariani of the Sheriffs Department identifies the 
costs actually incurred by the Sheriffs Department from 
November through February, and then identifies by task 
the costs incurred for the March 5, 2002 election and that 
are continuing to be incurred by the Sheriffs Department. 
As shown in Attachment IV, the Sheriffs Department 
reports expending $398,542 from November of 2001 
through February of 2002, an additional $347,467 for the 
March 5, 2002 election and another $59,192 to provide 
security at Pier 29, for a total of $805,201 of primarily 
Sheriffs overtime expenses. In response to inquiries from 
the Budget Analyst regarding why the Sheriffs 
Department incurred $805,201 of expenses, or $94,835 
more than the $710,366 proposed to be expended, Ms. 
Mariani advises that such expenditures were due to the 
fact that it was the first time the Sheriffs Department has 
provided security for elections and that requests to the 
Sheriff for additional security were made by the 
Department of Elections. Ms. Haygood denies that the 
Department of Elections made requests to the Sheriff for 
additional security. Ms. Mariani advises that, in addition to 
the subject supplemental appropriation, the Sheriffs 
Department will be seeking additional requests for funding 
from the Board of Supervisors to cover the $94,835 of 
expenses. 

According to Ms. Haygood, the Department of Elections 
explained the elections activities and procedures to the 
Sheriffs Department and left the decisions regarding the 
number and level of staffing and for which elections 
operations to the discretion of the Sheriffs Department. 
The Budget Analyst notes that for Proposition E, the 
Controller estimated in the Voter's Information Pamphlet 
that the Sheriffs costs would be approximately $245,000, 
assuming that two elections were held during the fiscal 
year. However, the Controller's estimates for the Sheriffs 
Department also assumed that some costs, such as the 
costs for Parking Control Officers (PCOs) to pick up the 
memory packs from the polling places after the election 
would be eliminated; a review of the Sheriffs costs indicate 
that they are still using the PCOs to pick up the memory 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

70 



MAR-15-2002 10=53 HflRUEY M ROSE PCC CORP 415 252 0461 P. 02/02 

Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

packs, and are now just overseeing and providing security 
for such operations. 

In the professional judgement of the Budget Analyst, the 
staffing and the level of security provided by the Sheriffs 
Department for the Department of Elections for the March 
5, 2002 election are excessive. Such costs could be reduced 
considerably for future elections in the Budget Analyst's 
judgement. The Budget Analyst recommends that the 
Board of Supervisors request the Sheriffs Department to 
immediately meet with the Department of Elections, the 
Mayor's Budget Office and the Controller's Office, in 
consultation with the City Attorney's Office, regarding the 
requirements of Proposition E, to review the required 
Sheriffs security costs for elections in detail in order to 
eliminate the excessive costs that were incurred by the 
Sheriff Office for the March 5, 2002 election and to provide 
a more reasonable level of security for future elections. 

13. As noted in all of the expense categories discussed 
above, the Department is requesting that the Board of 
Supervisors approve most of the requested supplemental 
appropriation on a retroactive basis because such requested 
funds have already been incurred. The Budget Analyst 
questions why the Department did not submit the 
requested supplemental appropriation immediately after 
the December of 2001 City Attorney run-off election was 
held, when the Department knew the extent of the cost 
overruns of the November of 2001 election, the December of 
2001 City Attorney run-off election expenses that had not 
been included in the budget, the potential costs of 
Proposition E which had been approved in November of 
2001, and the likely increased costs of the March 5, 2002 
election. At that time, there could have been a meaningful 
discussion regarding the need to either hire 102 Field 
Election Deputies or alternatively use available City staff, 
the need to rent vehicles at a cost of up to $185,000 for the 
March 5, 2002 election, the need for excessive amounts of 
Temporary Salary and Overtime expenditures, the need for 
the excessive level of Sheriffs Deputies to secure ballots, 
the need for technical consultant services and public 
relations contractors, additional materials and supplies, 
etc. In the professional judgement of the Budget Analyst, 
the Department should have obtained prior approval from 
the Board of Supervisors before incurring 6uch expenses 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

71 

TOTOI D (51 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



since such expenses were in excess of the Department's 
budget. 

Furthermore, the Budget Analyst concludes that there have 
been little, if any budgetary controls or efficiency measures 
undertaken by the Department, coupled with a total 
disregard by the management of the Department for the 
approved appropriations established in the FY 2001-2002 
budget. 

14. According to Mr. Ted Lakey of the City Attorney's 
Office, the Board of Supervisors is obligated to pay the 
salary expenditures that have been incurred for permanent 
or temporary employees who were properly authorized to 
work, and in fact did work for the DOE. Regarding the 
remaining non-salary expenditures, Mr. Lakey advises that 
the City Attorney's Office would have to review individual 
contracts and agreements that were entered into by the 
DOE to determine whether the City could withhold funds 
from such vendors and contractors, if the Board of 
Supervisors did not want to approve such funds. However, 
Mr. Lakey notes that in many of these cases, the DOE has 
already received and used the materials that may be in 
question (e.g., tables and chairs, cell phones, etc.), and the 
ability of the DOE to return such materials to vendors may 
be questionable. 

15. The Budget Analyst notes that the Department's FY 
2001-2002 budget also included an additional $62,087 of 
revenues from (1) the elimination of discounted fees for 
early submission of ballot arguments and (2) a ten percent 
increase in the ballot argument fees beginning with the 
March of 2002 election. However, the Department failed to 
submit the necessary legislation to adjust the fee structure 
by the March election, and to date, such legislation has still 
not been approved by the Board of Supervisors. As a result, 
the Department of Elections is continuing the unauthorized 
practice of offering discounts for ballot arguments, which 
subsidizes the costs of such paid arguments in the Voter 
Information Pamphlets, and will result in a revenue 
shortfall of $62,087 for the Department this fiscal year. 

16. According to Mr. Minasian, in response to the direction 
of the Elections Commission, the proposed supplemental 
appropriation does not include any funds for recanvassing 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

72 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Recommendations: 



of the 2000 elections. It should be noted that the 
Department had previously estimated that it would cost 
approximately $870,000 to conduct a full recanvassing of 
both the November and December of 2000 elections. Ms. 
Haygood advises that the Secretary of State has been 
working with the Department to negotiate an agreement 
with the Elections Commission and members of the Board 
of Supervisors to undertake a recanvassing of 21 precincts 
from the November of 2000 election that were previously 
canvassed by the State. According to Ms. Haygood, the 
State is preparing a proposed scope of work that would 
require a 3 rd party, selected through a Request for Proposal 
(RFP) process, to supervise the recanvassing, with the DOE 
supplying the direct canvassing staff. Ms. Haygood reports 
that at the Finance Committee Meeting on March 20, 2002, 
Ms. Haygood would provide an estimate of additional costs 
that would be required to conduct such a recanvassing. 

1. Amend the proposed ordinance by reducing the proposed 
supplemental appropriation by $403,608 from $5,658,870 to 
$5,255,262 as follows: 





Comment 
No. 


Requested 

Amount 


Budget Analyst 
Recommendation 


Savings 












Temporary Salaries 


2&3 


$1,616,129 


SI. 339.544 


$276,585 


Annual Vacation Payoff 




4,836 


4.836 





Overtime 




521,593 


521.593 





Holiday Pay 




24,687 


24,687 





Mandatory Fringe Benefits 


2&3 


280,241 


237.887 


42.354 


Poll Worker and Polling Place 
Expenses 




558,307 


558,307 





Professional and Specialized 
Services Contracts 


6 


226.641 


176.641 


50.000 


Maintenance - Buildings & 
Improvements 




3,279 


3.279 





Maintenance Equipment Contract 




228.393 


228.393 





Rents & Leases - Bldgs. & 
Structures 


7 


47,157 


32.488 


14,669 


Rents & Leases — Equipment 




269,431 


269.431 





Other Current Expenses 


9 


861,159 


841.159 


20,000 


Judgements - Legal Fees 




11.652 


11.652 





Taxes, Licenses and Permits 




1,347 


1.347 





Materials and Supplies 




52.433 


52.433 





Equipment Loan Pavment 




374.767 


374.767 





Services of Other Departments 




485.153 


485.153 





Interdepartmental Recoveries 




91.665 


91.665 





Total 


S5. 658. 870 


S5. 255. 262 


S403.608 



BOARD OF SUPERVISORS 
BUDGETANALYST 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



2. Approval of (a) the requested $220,000 for three public 
relations contracts and one technical services contract, (b) 
the requested $115,000 for rental of vehicles (although the 
Department actually expended $185,000), (c) $1,347 for 
Taxes, Licenses and Permits and (d) $52,433 for Materials 
and Supplies is a policy matter for the Board of 
Supervisors. 

3. Amend the proposed ordinance to provide retroactive 
approval of the subject request. 

4. Approve the requested ordinance, as amended. 

5. Request the Sheriffs Department to immediately meet 
with the Department of Elections, the Mayor's Budget 
Office and the Controller's Office, in consultation with the 
City Attorney's Office, regarding the requirements of 
Proposition E, to review the required Sheriffs security costs 
for elections in detail in order to eliminate the excessive 
costs that were incurred by the Sheriff Office for the March 
5, 2002 election and to provide a more reasonable level of 
security for future elections. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

74 



COSTS OF DECEMBER, 2001, RUNOFF ELECTION 



Attachmen t I 



DESCRIPTION I AMOUNT- 




POLL WORKER FEES AND POLLING PLACE RENTS 


v 410,661 


/' 


DPT ENFORCEMENT SVCS ON DEC.1 1 , 2001 (MEMORY PACK PICKUP) 


""" 19,889' 




TRAINER/INSPECTOR FOR THE DEC.1 1 , 2001 ELECTION 


5,850 




TEMP AGENCY WORKERS 


26,331 




MANAGEMENT CONSULTING SERVICES 


28,631 




DATA PROCESSING SERVICES 


5,226 




VEHICLE RENTAL 


6,740 




LIGHT TOWER RENTAL 


4,875 




TENT RENTAL 


10,275 




RESTROOM RENTAL 


11,548 




MAILING SERVICES 


59,717 




VIP PRINTING 


59,899 




DECEMBER BALLOTS 


147,723 




POSTAGE FOR VIP AND BALLOTS 


134,280 




ADVERTISING 


13,658 




MATERIALS AND SUPPLIES 


171,219 




IS-CENTRAL SHOPS-AUTO MAINT 


1,125 




IS-CENTRAL SHOPS-FUEL STOCK 


1,017 




GF-MAIL SERVICES 


2,312 




IS-REPRODUCTION 


3,292 




IS-TIS-ISD SERVICES 


42,300 




MISCELLANEOUS NOT DETAILED 


50,000 




SUBTOTAL 


1,216,569 




TEMPORARY SALARIES/OVERTIME (ONE-THIRD OF ACTUAL THROUGH DEC) 


731,265 




TOTAL 


1,947,834 





2/19/02 



75 



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Attac hment II 
Page 2 of 1 — 




Page 1 of 2 

Department of Elections (9.( ^x-^ilf YA Tammy Haygood 



Attachme nt II'. 
Page 1 c 
MY HAYG 
City and County of San Francisco V^^§l§liP8&^y Director 

March 1 1 , 2002 

To : Supervisor Chris Daly 

From : Tammy Haygood 

Director of Elections 

Subject: Information regarding consultants hired for communications, 

outreach, and voter education 

This is in response to your inquiry regarding communications specialists hired by the 
Department of Elections since the November election. The following is the information 
you have requested: 

■ Contractual commitments. Ironically, the article in the San Francisco Chronicle 
regarding my hiring of "communications specialists" is an example of poor 
communications. The Chronicle stated: "Since November, Haygood has hired four 
communications specialists from public relations firms, including Bill Strawn, former 
deputy press secretary for then-Mayor Dianne Feinstein, to help her answer 
questions from voters, candidates and the media." In fact, I have not actually hired 
two of the four consultants whom I introduced to the Chronicle reporter who wrote 
the article; they are working on a pro bono basis. I have requested their advice on a 
variety of communications, voter education, and outreach issues, and it has been 
very valuable. I have been soliciting such advice from many individuals throughout 
the public and private sectors at no cost to the City. 

The two consultants with whom I do have contractual commitments are working on 
an as-needed basis through March 31 , 2002. Each is limited to a maximum of 
$50,000, although I am hoping to keep actual charges below that amount. The 
scope of services they are providing is described in the two attachments to this 
memo. In addition, I employed one communications consultant prior to the 
November election at a cost of $20,000. 

■ Funding. The FY 01-02 original budget for the Department of Elections was based 
on a variety of estimated costs for professional and other services, totaling 
S3. 9 million for two elections. This amount included an estimate of $50,000 for voter 
outreach services. Of the $3.9 million, approximately $2.3 million has been 
expended or committed at this time for the November and December elections. As 
would be expected for a department that operates under such major uncertainties, 
some costs have exceeded last spring's estimates for the budget, and others are 



1 Dr. Carlton B. GoodleU Place - Room 48, San Francisco, CA 94102-4634 
Voice (415) 554-4375; Fax (415) 554-7344; Absentee.Fax (415) 554-4372; TDD (415) 554-4386 



Attachment III 
Fage 2 of 2 



Supervisor Chris Daly 
December 28, 2001 
Page 2 



below budget. My staff and I are preparing a detailed line-item analysis of our 
current and projected expenditures, which we will need to support the request for 
supplemental appropriation to be submitted in the next few weeks; however, 
I believe that the consulting services described above are both within my budgetary 
authority and defensible. 

■ Question regarding "Deputy Director" position. You have asked about a 
position that was added to the Department of Elections FY 00-01 budget by the 
Board of Supervisors. My understanding is that this position was a class 1376 
Special Assistant XVII, and that this position was not included in either the 
reorganization plan or the FY 01-02 budget request submitted by the department to 
the Board of Supervisors last spring. 

I am further informed that the three "Deputy Director" positions in the FY 01-02 
budget were in substitution for four "Division Managed positions that existed in the 
FY 00-01 budget. These Deputy Director positions have not yet been classified by 
the Department of Human Resources; hence; their specific responsibilities have not 
been defined. Of these three positions, only one is currently filled, as an operations 
manager; this employee is not able to support the department's communications 
needs. The funding for one of the other two positions has been diverted to pay for 
the continued employment of the 1376 Special Assistant XVII referred to above, to 
whom I have not assigned communications responsibilities. The third Deputy 
Director position is vacant at this time. 

■ Additional comments. It has become very obvious that the Department of 
Elections needs to improve and broaden the effectiveness, clarity, form, and 
channels of its communications at all levels including to the general public, voters, 
City staff, media, and the Board of Supervisors. Apart from my own perspective, this 
need was recently expressed to me by the members of the Rules Committee. The 
department unfortunately no longer has the luxury of utilizing such an outstanding 
spokesperson as Chris Hayashi was last year, despite the fact that our needs for 
communications are as great as they were before, if not greater. 

I believe that I am not only justified in hiring consultants to address these critical 
needs, but that I would be negligent if I were not to devote resources to this area 
right now. The department's communications efforts will result overtime in improved 
understanding by media, elected officials, and the public of both the election process 
and the department's operations. Such improved understanding is an essential 
ingredient to help break the pattern of reactively explaining the department's 
activities, a pattern that has been diverting far too many management resources. 

Please let me know if you would like any further information on this matter. 

c: Ed Harrington, Bill Lee 

7Q 



mar-14-2002 16 = 49 Attac hment IV 

Page I oi 



Sun Francisco Sheriffs Department 
OVERVIEW OF. ELECTION STAFFING AND PROCESS 



PLEASE 
POST 



The language of Proposition E is somewhat vague and open to interpretation. In an effort to 
better understand our impending role, we had staff observe the December 1 1 th run-off election 
from the early morning hours until the following morning. We have also been meeting with 
Julia Moll of the City Attorney's office in an effort to determine our obligations under this 
provision. The applicable paragraph of Proposition E follows: 

The text of the amendment to the City Charter reads: 

"The Sheriff shall be responsible for preserving the security and integrity of elections in all 
matters including but not limited to transporting all ballots and all other documents or devices 
used to record votes from the polls to the central county location and providing security for the 
ballots until the certification of the election results. This requirement shall not become 
operative following its adoption until the Sheriff has completed meeting and conferring 
required by state law. The Director of Elections shall develop and submit for the approval of 
the Elections Commission an alternative security plan if an incumbent sheriff is running for 
election. The elections commission shall send a copy of the approved security plan to the 
Board of Supervisors. " 

Our primary focus is the security of the voted ballots, their transport from the polling places to 
the "central county location" (Pier 29), and their security until the Secretary of State certifies the 
election. Our other primary focus is the retrieval of the memory data packs from the polling 
places to the uplink sites where the information is downloaded to the server at the Department of 
Elections. Both the collection of the voted ballots and the retrieval of the memory packs from 
each one of the 655 precincts must take place simultaneously. The provisions of Proposition E 
specifically require these tasks. 

Additionally, we must provide security to all the voted ballots during processing of the absentee 
ballots and provisional ballots; storage of voted ballots at Pier 29; transport of voted ballots to 
Brooks Hall for canvassing; continued security of ballots while at Brooks Hall (up to 29 days) 
and finally, escort of the voted ballots to secure, locked storage as obtained by the Department of 
Elections. This security also includes providing staff to open City Hall for longer hours; provide 
staff in the Department of Elections storage areas where some voted absentee ballots are kept; 
staff to insure the absentee voting area in the basement is secure and staff on Election Day and 
the days after to protect the public viewing areas. 

Secondary concerns involve our security of unvoted absentee ballots and regular ballots 
prompted by the less specific language in the proposition "The Sheriff shall be responsible for 
preserving the security and integrity of elections in all matters. . . " The plan that follows is our 
best effort at crafting a practical security plan that attempts to address our mandated obligations. 

1 . Brooks Hall Absentee Ballots: Security for this process was specifically requested by the 
Department of Elections and the Sheriffs Department honored that request. Due to space 
constraints, the DOE must use Brooks Hall for the reception and assembly of absentee ballots 
prior to mailing them to the public. It is anticipated by the DOE that they will be using Brooks 
Hall for some type of ballots processing up to the day of the election. At that time the Hall will 
be used to store voted ballots as they are processed in preparation for canvassing. 



Pap I of4 
2/; 8/02 



80 



MAR- 14-2002 16=48 

• - r- • „..„,„ Attachme nt IV 

ban Francisco bhcntfs Department Page 2 of 1'3~ 

OVERVIEW OF ELECTION STAFFING AND PROCESS 

2. FED Vehicle Security: 100 cars for the Department of Election Field Election Deputies (not 
deputy sheriffs) will be parked in the Civic Center Garage beginning the evening before Election 
Day until they are picked up at approximately 0600 Hours on Election Day. These will be rental 
vehicles and will be packed with ballots and other equipment the FEDs will require in order to 
execute their duties. 

3. Sheriffs Command Post: The Sheriffs Command Post will be located in Room 34 in the 
basement of City Hall adjacent to the Department of elections Operations Center. Deputies 
trained in tactical communications will be assigned as well as a Department Operations Center 
Commander. 

4. Mobile Support Unit Deputies: During the morning and evening hours, we will have five 
teams of two deputies each who have been trained in poll procedure, uplink procedure and FED 
procedures, assigned to various areas of the City. They will be available to respond when 
directed by the Command Post. They may be necessary to respond to problems at the polls, pick 
up memory packs or assist in transferring ballots. 

5. Memory Pack Collection: (Memory Packs are small electronic devices that plug into 
the Eagle machines and record the votes.) Sheriffs staff will utilize up to 130 parking control 
officers and 10 deputy sheriffs to collect data memory packs from 655 precincts. Sheriff's staff 
will work with DPT and the DOE to train and organize routes for each officer engaged in the 
collection of the packs. 

6. Uplink. Site Security: (The Memory Packs are retrieved from each polling place and 
delivered to an uplink site where they are attached to an adapter and the information is 
sent to the server at City Hall via a modem connection.) Deputy Sheriffs will provide security 
at eight Uplink Sites around the City. They will coordinate the PCOs assigned to each of their 
uplink sites as well as the collection and downloading of the memory packs. 

7. Precinct Security and Ballot Collection: 100 deputy sheriffs will report midday to Pier 
30/32 and be assigned to work as a team with civilian FED (Field Election Deputies) partners 
from the Department of Elections. (The FEDs will begin their day at 0600 Hours) They will 
muster and report to prearranged rendezvous sites, at staggered times, where their partner will 
pick them up. Since it is possible that some of the Eagle Boxes may fill up prior to the closing of 
the polling places, they may be required to pick up voted ballots and deliver them to the central 
county location (Pier 29). They will then work with their partners to close their assigned polls 
and deliver the red boxes to Pier 29. It is important to note that State law requires the presence 
of two or more people at all times when handling voted ballots. 

8. Pier 29 Security: Pier 29 has been designated as the central county location for the 
collection of the ballots. Activity begins the night before the election in organizing and setting 
up the processing area as well as storing equipment required for the election. As ballots are 
collected from the precincts they will be delivered to this site to await processing. Some aspects 
of processing will begin immediately as the red boxes are opened and the contents are sorted. It 
is now anticipated that voted ballots will be present at this site until March 10 th . The public will 
also have access to observe the processing of the ballots at this site. The Sheriffs Department is 



Pige2of4 
2/18/02 



81 



MPR-14-2Q02 16=49 



. _ . ., .,„ .. , . Attachm ent IV 

San Francisco itenfTs Department Page 3 of l -5 

OVERVIEW OF ELECTION STAFFING AND PROCESS 



responsible for the security of all ballots at this site. It should be noted that during the November 
election, a member of the press attempted to test the security a number of times. Our projected 
use of staff is based on our understanding of the planned activity level for Election Day. 

9. Brooks Hall- Security for Canvassing and until Certification: Once the ballots are sorted 
at Pier 29 they will be moved to Brooks Hall. The Sheriff is responsible for providing security 
during this movement. Additionally, once the absentee and provisional ballots have been 
processed at City Hall, they will be moved to this site under our escort. Once all ballots are 
located here, the canvassing process will begin. This process is also open to the public. Due to 
the physical constraints of this area, we will require two deputy sheriffs for each shift until the 
canvassing ends. Once the canvassing ends, the ballots will continue to be stored at this location 
until certification of the election and arrangements are made by the DOE for their transport to a 
secure, locked storage facility. 

10. City Hall - Enhanced Security: Deputy Sheriffs will provide security for extended hours at 
City Hall for voter registration, absentee voting and storage and processing of absentee ballots in 
the DOE area. In addition, the deputy sheriffs will be providing security as the public views the 
election process and will escort ballots as they are received from the printer, stored and voted 
upon at the absentee voting site located adjacent to the DOE office. The absentee ballots at this 
location consist of those stored for use by the absentee polling site and the voted absentee 
ballots. These will be stored and will be transferred to the DOE offices for processing prior to 
Election Day. Processing in this area will continue on Election Day and after. It is anticipated 
that increased security in this area will be required until March 15. Our staffing of security will 
be based on the activity level and our perceived need for security. 

1 1. Training SFSD Staff: Deputy Sheriffs assigned to FED partners, uplink site security, 
memory pack collection, roving teams and some supervisors will require training provided by the 
Department of Elections. This will take place in the week prior to Election Day. Ttis anticipated 
that half of the training will take place on duty and the other half will require overtime. Wc hope 
to accomplish the transfer of required information in three hour blocks of training. ~ 

12. Absentee Ballot Collection from Main Post Office: Once absentee ballots are returned 
from voters, they become voted ballots. It appears clear under Proposition E that we are 
responsible for the security of these ballots. Beginning February 1 1 th we will transport absentee 
ballots from Brooks Hall to the Main Post Office for mailing. It is anticipated that completed 
ballots could be received as early as February 13 th . The Sheriff's will work with DOE 
employees to collect completed ballots from the Main Post Office and transport them to City 
Hall twice per day. We will use our Station Transfer Unit deputies to perform this duty from 
February 1 1 th through March 5 th . 

This will be accomplished through the use of on-duty personnel. 

13. Delivery of Unvoted Ballots to Poll Inspectors: There is concern that in order to ensure the 
chain of custody of the unvoted ballots as they are distributed to the polling place inspectors, 
deputy sheriffs should be present as security during this process. This distribution will take place 
via two methods: Delivery at Bill Graham the Saturday before election and delivery to the 
homes of specific inspectors on Sunday and Monday before the election. 



?aSc3of4 

:ns/02 



82 



MAR- 14-2002 16=49 

San Francisco Sheriffs Department Attachment IV 

OVERVIEW OF ELECTION STAFFING AND PROCESS Page 4 of 13 



14. Escort of Unvoted Ballots from 240 Van Ness to Brooks Hall (Bill Graham 
Auditorium): A deputy sheriff will escort the unvoted ballots from 240 Van Ness to the Bill 
Graham Auditorium for the process noted in #13. No additional staff required. 

15. Ballot Collection/Cargo Trucks and Drivers: The Department of Elections has increased 
the number of teams that go out to assist in closing polling places and collecting red boxes (voted 
ballots) from each precinct. It is necessary to assign one deputy sheriff with each of the 22 
Cargo vans and 15 drivers they will have available for this purpose. 

16. Security for Dismantling of Eagle Boxes: Eagle Boxes are collected by DOE employees 

from the precincts in the four days following the election. After they collect them and deliver 
them to the Cor-o-van warehouse, they dismantle them. It is reported that 5% of the Eagle 
Boxes collected in the November 2001 election contained a small number of uncollected ballots. 
On the days following the election, the DOE will pick up the Eagle Boxes in the morning, take 
them to the Corovan warehouse and dismantle them in the afternoon. In order to ensure the 
security of any errant voted ballots that may be discovered in an Eagle Box, a deputy sheriff will 
be present during the inventory and dismantling of the Eagle Boxes to take custody of the ballot 
along with a DOE employee and ensure the ballot(s) are delivered to the collection point. 



Additionally, at the request of the Department of Elections, we have had two deputy sheriffs 
stationed around the clock at Pier 29 providing security for the November /December 2000 
ballots since November 22, 2001. The DOE has requested that they remain at this location until 
February 28 th , 2002. 



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93 



Attachment V 



Page 2 of 4 

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94 



Attachment V 
Page 3 of 4 



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95 



Attachment V 
Page 4 of 4 



a u ! ! ! ! 



96 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Item 9 - File 02-0251 

Department: 

Item: 



Amount: 
Source of Funds: 



Budget: 



Description: 



Department of the Environment (DOE) 

Hearing to consider the release of reserved funds for the 
Department of the Environment in the amount of 
$104,300 for professional services. 

$104,300 

Public Utilities Commission funds work-ordered to the 
Department of the Environment. Such funds were 
previously appropriated and reserved by the Board of 
Supervisors in the Department of the Environment's 
Fiscal Year 2001-2002 budget. According to Ms. Ann Kelly 
of the DOE, the reserved funds were workordered from 
the PUC to the DOE in the FY 2001-2002 budget due to 
the DOE's expertise in providing energy conservation 
services for the City. 

A summary budget of the subject $104,300 for the 
following energy-related projects to be performed by two 
outside consultants, Brown, Vence, and Associates and 
Hellmuth, Obata, & Kassabaum, is as follows: 



Project 
Multifamily Green 

Building 
Solar Market Study 
Residential Energy 

Conservation Ordinance 
Commercial Energy 

Conservation Ordinance 
Electricity Resource Plan 
Energy End-Use Study 
Total 



Estimated 
Hours 

122 

332 



Hourly 
Rate 

$114.50 
$114.50 



144 $104.75 



192 
48 
115 
953 



$104.75 
$105.75 
$104.75 



Total 

$13,969 
38,014 

15,084 

20,112 

5,076 

12.046 

$104,301! 



The Board of Supervisors previously appropriated and 
placed on reserve $119,300 in the FY 2001-2002 budget of 
the DOE. The funds are for professional services to 



1 The total contract amounts for the six projects sum to S104.301. Ms. Kelly advises that DOE will 
fund the SI difference from other sources. 

Board of Supervisors 
Budget Analyst 
97 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

conduct energy-related projects, and were reserved 
pending submission to the Finance Committee of a) a 
specific description of the energy projects, b) selection of 
consultants to assist the DOE with energy planning, and 
(c) the consultant's estimated hours and hourly rates. 

In December of 2001, the Board of Supervisors released 
$15,000 (File 01-2028) of the $119,300 previously placed 
on reserve to fund the completion of the Climate Change 
Action Plan, resulting in the remaining balance of 
$104,300. The DOE is now requesting the release of the 
remaining $104,300 to be used for the following energy 
resource projects: (a) Multi-family Green Building; (b) 
Solar Market Study; (c) Residential Energy Conservation 
Ordinance; (d) Commercial Energy Conservation 
Ordinance; (e) Electricity Resource Plan; and (f) Energy 
End-Use Study. Attachment I, provided by DOE provides 
descriptions of these energy-related projects. 

The $104,300 would be used to fund contracts with two 
outside consultants selected through a Request for 
Proposals (RFP) process: (a) Brown, Vence, and Associates 
and (b) Hellmuth, Obata, & Kassabaum. Attachment II, 
provided by DOE provides details on the RFP process. As 
detailed in Attachment II, the process consisted of: (a) 
RFPs being sent to 75 firms; (b) the DOE received 10 
proposals; (c) a panel evaluated and scored the 10 
proposals on predetermined criteria of firm experience, 
personnel experience, added value and fees; (d) a panel 
interviewed the firms scoring above 70 points on the 100 
point scale; and (e) three firms were chosen for energy 
consulting projects based on the interviews. See Comment 
No. 2 with respect to the third firm. As shown in 
Attachment II, Brown, Vence, and Associates, Hellmuth, 
Obata, & Kassabaum and one other consultant, ICF 
Consulting, (see Comment No. 2) received the highest 
scores of the competing firms. 

Comments: 1. Ms. Kelly reports that Hellmuth, Obata, & Kassabaum 

will be contracted to work on the following projects for a 
total contract amount of $51,983: (a) the Multi-family 
Green Building for $13,969; and (b) the Solar Market 
Study for $38,014. Ms. Kelly further states that Brown, 

Board of Supervisors 
Budget Analyst 

98 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Vence & Associates will be contracted to work on the 
following projects with a total contract amount of $52,318: 
(a) the Residential Energy Conservation Ordinance for 
$15,084; (b) the Commercial Energy Conservation 
Ordinance for $20,112; (c) the Electricity Resource Plan 
for $5,076; and (d) the Energy End-Use Study $12,046. 

2. As stated in Attachment II, DOE has also selected ICF 
Consulting for contract services through the same RFP 
process. Ms. Kelly reports that DOE will request separate 
approval from the Finance Committee for the release of 
reserved funds in the amount of $97,500 for that contract. 



Recommendation: 



Approve the requested release of reserved funds in the 
amount of $104,300. 




f^ 



Harvey M. Rose 



cc: Supervisor Peskin 
Supervisor Daly 
Supervisor Maxwell 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



Board of Supervisors 
Budget Analyst 

99 



Attachment I 
DEPARTMENT OF THE ENVIRONMENT 

Consultant Tasks FY01-02 
Energy Resource Projects 



Multi-family Green Building. Contractor will provide direct technical assistance to non- 
profit developers currently designing multi-family housing subsidized through the 
Mayor's Office of Housing. 

Solar Market Study. Contractor will develop customer profiles. Using City 
information sources and information from existing solar programs, the dimensions of the 
pool of potential customers will be estimated. Specific potential customers will be 
identified to the extent possible. Financial models will be developed for prioritized 
customer profiles. 

Residential Energy Conservation Ordinance (RECO). Contractor will analyze at least 
six new energy efficiency measures for the RECO in terms of cost effectiveness. The 
measures will include: R-30 ceiling insulation, wall insulation, duct sealing, blower door 
testing, air sealing and caulking, minimum furnace efficiency, and minimum refrigerator 
efficiency. 

Commercial Energy Conservation Ordinance (CECO). Contractor will review 
existing energy efficiency measures and recommend amendments. Contractor will 
analyze at least five new energy efficiency measures for cost effectiveness including: 
occupancy sensors, low flow water devices, efficiency modifications to existing HVAC 
equipment, high efficiency refrigeration equipment, and peak load management controls. 

Electricity Resource Plan. Contractor will determine specific numbers to be used in the 
City's objectives for attaining the goals set in the Electricity Resource Plan to be 
presented to the Board of Supervisors. Objectives include the amount of electricity to be 
generated from renewable energy and cogeneration sources, number of megawatts saved 
through energy efficiency, decrease in power plant emissions, and cost estimates. 
Consultant tasks will be more firmly defined following public hearings on the Plan to be 
held next week. 

Energy End-Use Study Contractor will segment the market and using available end use 
information develop profiles for each market segment. This will include a peak 
electricity load profile as well as a breakdown of the primary end uses per market 
segment for both electricity and natural gas. Market segments will be analyzed for 
various electric peak load reduction opportunities including: controls, load shifting, and 
replacement with high efficiency equipment 



, no Source: DOE 




Attachment II 
Page 1 of 6 



SF Environment 




WILLIE L. BROWN, JR. 
Mayor 

JARED BLUMENFELD 
Director 



March 7, 2002 

TO: Mr. Harvey Rose, Budget Analyst 

FROM: Ann Kelly, Senior Energy Specialist 

SUBJECT: The RFP Process for Energy Technical Assistance 

This memo is in response to an email request from Sarah Graham to David Assmann on 3/4/02 regarding the 
release of reserves for energy projects. The information below and in attachments A-D address the first item in the 
request: an explanation of the RFP process. Information for items (2) a complete budget, and (3) a description of 
projects, will be forthcoming. 

An RFP for Energy and Resource Efficiency Consulting Assistance was issued by the Department of the 
Environment on December 10, 2001 . The RFP was posted on the web site that day and a notice sent to over 75 
parties over the next few days. Requests from other parties were met as they were received. A pre-proposal 
conference was held for bidders on December 18. Nineteen persons attended, representing 17 consulting firms. 
Attendance was not a prerequisite for submitting a bid. Ten proposals were received by the due date of January 18. 
One proposal was disqualified when a section of the proposal arrived after the deadline. 

The RFP stated that the department was seeking to engage up to three firms to provide as-needed research, energy 
engineering, technical analysis, policy, and program design and implementation support. These tasks covered 
assistance that would be needed in the department to support several programs, including Green Building, Solar, 
Residential and Commercial Energy Codes, Small Business "Power Savers" program, and an energy profile study 
of San Francisco building types. While each of these programs is different and has specific goals, they share 
similar research and technical support requirements. The intent of this RFP was to enable the department to 
manage programs more cost effectively by entering into contracts with several firms who could perform tasks that 
overlap program areas and that would need support simultaneously. Monitoring and verification work intended for 
the Power Savers Program was included in this RFP. A request for release of the S97,500 set aside for that purpose 
will be sent to the Budget Analyst shortly. 

A panel of three reviewers was set up to evaluate and score the proposals, using a predetermined set of criteria that 
had been spelled out in the RFP. Each of the criteria was assigned a designated number of points totaling 100 
(Attachment A). The RFP indicated that the top 5 proposers receiving scores greater than 70 points would be 
invited to an oral interview. The results of the panel's scoring are shown in Attachment B. 

One of the criteria was fees, which was assigned 20 points. All bidders were provided a fee worksheet with a list of 
12 job classifications and hours representative of a task they might be asked to perform. (Attachment C). This was 
done to create an even playing field and to prevent gaming for lowest bid status. 

Only four consulting firms scored above 70 points. They were interviewed on January 30 and 3 1 by the three 
reviewers plus one other panelist. Each finalist was asked the same set of eight questions, which they had received 
prior to the interview. They were also asked to respond to a ninth question of which they had no prior knowledge. 
Each question was assigned 10 points, for a total of 90 points. All interviews were limited to 90 minutes. The 
results of the interview scores are in Attachment D. Three consulting firms were chosen based on the interview 
scores: Brown, Vence, and Associates (BVA), Hellmuth, Obata & Kassabaum (HOK), and ICF Consulting. 



ipartmerrt of the Environment, City and County of San Frandsca 

plephone: (415) 355-37CG • Fax: (415) 554-6393* 11 Grove Street, San Francisco, CA 94102 



rail: Environment@ci.sf.ca. us • www.sfenvironment.com 



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ATTACHMENT B 

SCORES & RANKING OF PROPOSALS 



Attachment II 
Page4 of 6 



TECHNICAL RFP PROPOSAL SCORES 



UJ 



GARY OTO 












Average Values 




BVA 


28 


34 


11.5 


7 


80.5 


BVA 


76.83 


NA 


26 


32 


12.34 


4 


74.34 


NA 


59.34 


ICF 


25 


30 


12.29 


4 


71.29 


ICF 


78.29 


Nexant 


24 


30 


12.47 


2 


68.47 


Nexant = 


62.80 


HOK 


21 


30 


10.47 


2 


63.47 


HOK = 


74.80 


Mazetti 


21 


26 


12.8 


2 


61.8 


Mazetti = 


74.13 


AESC 


20 


24 


15.14 





59.14 


AESC 


60.81 


PECI 


18 


20 


14.36 





52.36 


PECI 


51.03 


Digital 


18 


20 


20 





58 


Digital = 


56.67 


Stella* 


10 


12 








22 


Stella 


15.67 


•DISQUALIFIED 
















ANN KELLY 












Ranking 




BVA 


27 


33 


11.5 


7 


78.5 


ICF 


78.29 


NA 


22 


30 


12.34 


2 


66.34 


BVA 


76.83 


ICF 


24 


30 


12.29 


5 


71.29 


HOK 


74.80 


Nexant 


25 


30 


12.47 


5 


72.47 


Mazetti 


74.13 


HOK 


22 


30 


10.47 


8 


70.47 


Nexant 


62.80 


Mazetti 


22 


30 


12.8 


3 


67.8 


AESC 


60.81 


AESC 


23 


30 


15.14 


5 


73.14 


NA 


59.34 


PECI 


20 


25 


14.36 


2 


61.36 


Digital 


56.67 


Digital 


20 


25 


20 


2 


67 


PECI 


51.03 


Stella 

















Stella 


15.67 



PETER O'DONNELL 



BVA 

NA 

ICF 

Nexant 

HOK 

Mazetti 

AESC 

PECI 

Digital 

Stella 



25 


30 


11.5 


5 


71.5 


10 


15 


12.34 





37.34 


30 


40 


12.29 


10 


92.29 


15 


20 


12.47 - 





47.47 


30 


40 


10.47 


10 


90.47 


30 


40 


12.8 


10 


92.8 


15 


15 


15.14 


5 


50.14 


10 


15 


14.36 





39.36 


10 


15 


20 





45 


10 


15 








25 



104 



Source: DOE 



ATTACHMENT C 

TECHNICAL ASSISTANT PROPOSAL 
FEE WORKSHEET 



Attachment II 
Page 5 of 6 



Position 

Manager 

Senior Engineer 

Associate Engineer 

Architect 

Project/Construction Manager 

Auditor 

Data Analyst 

Marketer 

Researcher/Writer 

Junior Professional Staff 
Administrative 

Clerk 
TOTAL 



Estimated Hours 
(as a percentage 
of sample project) 



Rate/hr 



Total 



5 

15 

15 

4 

5 

10 

7 

7 

7 

15 
5 



100 



105 



Source: DOE 



ANN KELLY 



AVERAGE SCORES 



BVA 


79 


ICF 


70 


HOK 


64.5 


Mazetti 


52.25 



Attachment II 
Page 6 of 6 



ATTACHMENT D 

Tech Proposals Interview Scores 

Q1 Q2 Q3 
CAL BROOMHEAD 



Q4 Q5 



Q6 



Q7 



Q8 



Q9 



TOTAL 



BVA 


10 


8 


10 


9 


10 


10 


9 


9 


10 


85 


ICF 


8 


8 


6 


6 


6 


9 


9 


6 


9 


67 


HOK 


10 


2 


3 


3 


10 


5 


5 


7 


5 


50 


Mazetti 


8 


8 


7 


2 


5 


5 


3 


5 


7 


50 


GARY OTO 






















BVA 


9 


9 


10 


10 


10 


9 


9 


9 


9 


84 


ICF 


8 


10 


8 


8 


7 


10 


10 


8 


10 


79 


HOK 


9 


10 


8 


7 


9 


8 


8 


8 


8 


75 


Mazetti 


8 


8 


8 


8 


7 


7 


7 


7 


7 


67 



PETER O'DONNELL 



BVA 
ICF 
HOK 
Mazetti 



10 


8 


10 


8 


5 


8 


10 


7 


5 


7 


5 


8 



6 

10 

3 



7 

10 

5 

5 



71 

64 
60 
43 



BVA 

ICF 

HOK 

Mazetti 



10 
7 
7 
6 



9 

7 

10 

6 



76 
68 
73 
49 



106 



Source: DOE 



City and County of San Francisco 

Meeting Minutes 

Finance Committee 

Members: Supervisors Aaron Peskin and Chris Daly 
Clerk: Gail Johnson 



City Hall 

1 Dr. Carlton B. 

Goodlett Place 

San Francisco, CA 

94102-4689 



Wednesday, March 27, 2002 



12:30 PM 
Regular Meeting 



City Hall, Room 263 



Members Present: Aaron Peskin, Chris Daly, Tony Hall. 



President Ammiano appointed Supervisor Hall to the Finance Committee for the meeting of March 27, 2002, 
only. 

MEETING CONVENED 

The meeting convened at 12: 34 p.m. 

020144 [Establishing Trial Rates for City Owned Garages and Metered Parking Lots] 

Resolution approving trial rates as proposed permanent parking rates, with adjustments, for the Civic Center 
Garage, the Ellis O'Farrell Garage, the 16th & Hoff Street Garage, the 324-8th Avenue Parking Lot (at 8th and 
Clement), the 330-9th Avenue Parking Lot (at 9th and Clement) and the 421-18th Avenue Parking Lot (at 18th 
and Geary) and the Performing Arts Garage. (Parking and Traffic Department) 
2/6/02, RECEIVED AND ASSIGNED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Steven Lee, Parking Authority; Ronald Szeto, 
Parking Authority. 
Continued to 3/20/02. 

Speakers: None. 
Continued to 4/10/02, 
CONTINUED by the following vote: 

Ayes: 3 - Peskin, Daly, Hall 



020390 [Administrative Code Revision: Health Service System] 
Supervisor McGoldrick 

Ordinance amending Chapter 16, Article XV, of Part 1 of the San Francisco Municipal (Administrative) Code 
by amending Section 16.703 regarding Board approval of Health Service System Plans and Contribution Rates. 
(Human Resources Department) 

(Fiscal impact.) 

3/11/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst: Yvonne Hudson, Health Service System. Mike 
Kramer, Towers Perrin. 
Continued to 4/10/02. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



City and County of San Francisco 



I'rint.-J at 4:59 PM ,>n 



Finance Committee Meeting Minutes March 27, 2002 



020410 [Municipal Transportation Agency Leverage Lease Financing] 
Mayor 

Resolution authorizing one or more defeased lease-to-service contract transactions with respect to up to 118 
Breda light rail cars; approving the form of and authorizing the execution and delivery of one or more 
Participation Agreements setting forth the terms and conditions of the lease-to-service contract transactions 
relating to the rail cars; approving the form of and authorizing the execution and delivery of one or more Head 
Lease Agreements providing the terms and conditions pursuant to which the rail cars will be leased to one of 
up to 6 trusts; approving the form of and authorizing the execution and delivery of one or more Head Lease 
Supplements supplementing the terms and conditions pursuant to which specific rail cars will be leased to each 
trust; approving the form of and authorizing the execution and delivery of one or more Sublease Agreements 
providing the terms and conditions pursuant to which each trust will lease the rail cars back to the City to be 
operated and maintained by the City; approving the form of and authorizing the execution and delivery of one 
or more Sublease Supplements supplementing the terms and conditions pursuant to which the City will lease 
back the rail cars from each trust; approving the form of and authorizing the execution and delivery of one or 
more Payment Agreements providing the terms and conditions pursuant to which the City will provide for the 
payment of a portion of the sublease rent; approving the form of and authorizing the execution and delivery of 
an Equity Collateral Security Agreement and a Custody Agreement providing the terms and conditions 
pursuant to which the City will provide for a custody account to hold and a security interest in, certain 
securities for the payment of a portion of the sublease rent and the purchase option purchase price if the 
purchase option is or is deemed exercised; approving the form of and authorizing the execution and delivery of 
one or more Support and Access Agreements providing the terms and conditions pursuant to which the City 
will provide each trust support and access to certain property if the City chooses not to purchase the rail cars at 
the end of the "base" sublease term; approving the form of and authorizing the execution and delivery of one or 
more Agreements for Assignment on Default each of which will provide the lender with an option to purchase, 
and take an assignment from an equity investor, such equity investor's beneficial interest in the trust estate upon 
the occurrence of a trigger event (as such term is defined in said Agreement); approving the form of and 
authorizing the execution and delivery of one or more Tax Indemnification Agreements providing the terms 
and conditions pursuant to which the City will indemnify each equity investor for income inclusions or losses 
of tax benefits; approving the form of and authorizing the execution and delivery of one or more Insurance and 
Indemnity Agreements providing the terms and conditions pursuant to which the City will indemnify each strip 
surety provider; approving indemnification of various parties; acknowledging the waiver of the City's right to 
jury trial under certain circumstances; acknowledging proposed waiver requests pursuant to Sections 12B.5- 
1(d) and 12C.5-l(d) of the San Francisco Administrative Code; finding that the lease-to-service contract 
transaction is designed to reduce the amount or duration of payment or similar risk to the City or enhance the 
relationship between risk and return with respect to investments made pursuant to or in connection with such 
transaction; approving and authorizing the execution and delivery of any document necessary to implement this 
Resolution; authorizing the execution and delivery of documents in conforming sets for one or more equity 
investors; ratifying and approving any action heretofore taken in connection with the transaction contemplated 
by this Resolution; and related matters. (Mayor) 
3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. 
Speakers: None. 
Continued to 4/10/02, 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



City and County of San Francisco 2 Printed at 4:59 PM on 3/3/04 



Finance Committee 



Meeting Minutes 



March 27, 2002 



020388 [Contracting out Janitorial Services] 

Resolution concurring with the Controller's certification that janitorial services can be practically performed by 
private contractor for lower cost than similar services performed by City and County employees. (Parking and 
Traffic Department) 

3/13/02, RECEIVED AND ASSIGNED to Finance Committee. 
Heard in Committee. Speakers: Harvey Rose, Budget Analyst. 
RECOMMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



020395 [Gift - SF Public Library] 

Resolution authorizing the San Francisco Public Library to accept and expend a gift in the amount of 5150,100 
from the Friends and Foundation of the San Francisco Public Library for the Ocean View Art Project and for 
the James C. Hormel Gay and Lesbian Center. (Public Library) 
3/13/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; George Nichols, Finance Director, Library; 
Marquine Gomez, Executive Director, Friends and Foundation of San Francisco Public Library. 
Amended by adding the following Further Resolved clause at the end of the resolution: "Be it further resolved 
that the gift of $25, J 00 will only be used to temporarily increase staff hours to complete the archiving of 
materials from the Harry Hay and Dorr Jones collections in the Hormel Center and that the Library will 
reduce staff hours funded by the gift once the funds are 
expended. " 
AMENDED. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Hall 



020438 [Reserved Funds, Mayor's Office of Community Development - 1998 CDBG Block Grant Program] 

Hearing to consider release of reserved funds. Mayor's Office of Community Development, in the amount of 
$381,331 (File 98-0217: Resolution No. 121-98), to fund the construction of a new multi-purpose 
neighborhood center located in Visitacion Valley. (Mayor) 
3/18/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Pamela David. Director, Mayor's Office of 
Community Development; Monique Zmuda, Chief Financial Officer, Department of Public Health; Linda 
Laura, Executive Director, Geneva Valley Development Corporation. 
Release of reserved funds in the amount of $381,331 approved. 
APPROVED AND FILED by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



City and County of San Francisco 



Printed at •/.■<« I'M on i .? 04 



Finance Committee Meeting Minutes March 27, 2002 



SPECIAL ORDER - 2:30 PM 



020286 [State grant for renovation of Harding Park and Fleming Golf Courses] 
Supervisors Hall, Daly 

Resolution authorizing the City and County of San Francisco to accept and expend State grant funds under the 

Per Capita Grant Program, in the amount of $8,1 1 1,000, and under the Roberti-Z'berg-Harris Urban Open 

Space and Recreation Program Block Grant, in the amount of $5,016,627, from the Safe Neighborhood Parks, 

Clean Water, Clean Air and Coastal Protection Bond Act of 2000; adopting findings pursuant to the California 

Environmental Quality Act; and adopting findings that such action is consistent with the City's General Plan 

and Eight Priority Policies of City Planning Code Section 101.1. 

2/1 1/02, RECEIVED AND ASSIGNED to Neighborhood Services and Recreation Committee. 

2/20/02, TRANSFERRED to Finance Committee. 

2/28/02, REFERRED. Heard in Committee. Speakers: Supervisor Newsom; Ted Lakey, Deputy City Attorney, City Attorney's Office. 

Transferred to Finance Committee. 

3/18/02, SUBSTITUTED. Supervisor Hall submitted a substitute resolution bearing same title. 

3/18/02, ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Cohen, Deputy City Attorney; 

Elizabeth Goldstein, General Manager, Recreation and Park Department; Commissioner Lynne Newhouse 

Segal, Recreation and Park Commission; Gary Hoy, Capital Program Manager, Recreation and Park 

Department; Dan McKenna, Acting Superintendent, Recreation and Park Department; Jaci Fong, Director of 

Property Management, Recreation and Park Department; Leon Gilmore, Western Regional Director, The 

First Tee, Commissioner Jesse Arreguin, Youth Commission; Gene Krekorian, Economics Research 

Associates (ERA); Ken Bruce, Budget Analyst's Office; Theodore Lakey, Deputy City Attorney; Mike Ippocito; 

Mr. A. D. Ward, Director, Allen Junior Golf Program; Duane Perry; Dan DeVries, President, Lincoln Park 

Golf Club; Bo Links; Phil Havlicek; Reola Freeman; Jene Lamison; Xavier Schmidt; Lou Perrone, President, 

Harding Park Golf Club; Connell Craig; Linda Hunter, Neighborhood Parks Council; Josh Kauffman; Sandy 

Tatum; Bud Wilson, Greater West Portal Neighborhood Association. 

Amended on page 2, line 16, by replacing "October 12" with "October 30. " Further amended at the end of the 

resolution by adding the following Further Resolved clause: "Further Resolved, That the department may not 

spend the grant funds authorized by this resolution unless and until the PGA Tour has duly executed the 

Master Tournament Agreement infde with the Clerk of the Board in File No. 020201. " 

AMENDED. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Hall 



City and County of San Francisco 4 Printed at 4:59 PM on 3/3/04 



Finance Committee 



Meeting Minutes 



March 27, 2002 



020201 [PGA Tour Championship at Harding Park Golf Course] 
Supervisor Hall 

Resolution approving and authorizing a Master Tournament Agreement with PGA Tour, Inc., for the use of 
Harding Park Golf Course for the PGA Tour Championship Tournament. 

2/4/02, RECEIVED AND ASSIGNED to Neighborhood Services and Recreation Committee. 
2/20/02, TRANSFERRED to Finance Committee. 

3/18/02, SUBSTITUTED. Supervisor Hall submitted a substitute resolution bearing same title. 
3/18/02, ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Cohen, Deputy City Attorney; 
Elizabeth Goldstein, General Manager, Recreation and Park Department; Commissioner Lynne Newhouse 
Segal, Recreation and Park Commission; Gary Hoy, Capital Program Manager, Recreation and Park 
Department; Dan McKenna, Acting Superintendent, Recreation and Park Department; Jaci Fong, Director of 
Property Management, Recreation and Park Department; Leon Gilmore, Western Regional Director, The 
First Tee, Commissioner Jesse Arreguin, Youth Commission; Gene Krekorian, Economics Research 
Associates (ERA); Ken Bruce, Budget Analyst's Office; Theodore Lakey, Deputy City Attorney; Mike Ippocito; 
Mr. A. D. Ward, Director, Allen Junior Golf Program; Duane Perry; Dan DeVries, President, Lincoln Park 
Golf Club; Bo Links; Phil Havlicek; Reola Freeman; Jene Lamison; Xavier Schmidt; Lou Perrone, President, 
Harding Park Golf Club; Connell Craig; Linda Hunter, Neighborhood Parks Council; Josh Kauffman; Sandy 
Tatum; Bud Wilson, Greater West Portal Neighborhood Association. 
Amended on page 3, line 2, by replacing "October 12" with "October 30. " 
AMENDED. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Hall 



020198 [Determination of Fees at Harding Park and Fleming Golf Courses] 
Supervisors Hall, Daly 

Ordinance amending Article XII of the San Francisco Park Code by adding Section 12.12 thereto setting forth 

a fee structure for Harding Park and Fleming Golf Courses. 

2/4/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 3/6/2002. 

3/1 1/02, SUBSTITUTED to Finance Committee. Supervisor Hall submitted a substitute ordinance bearing same title. 

3/1 1/02, ASSIGNED to Finance Committee. 

3/20/02, CONTINUED. Speakers: None. 

Continued to 3/27/02. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Cohen, Deputy City Attorney; 
Elizabeth Goldstein, General Manager, Recreation and Park Department; Commissioner Lynne Newhouse 
Segal, Recreation and Park Commission; Gary Hoy, Capital Program Manager, Recreation and Park 
Department; Dan McKenna, Acting Superintendent, Recreation and Park Department; Jaci Fong, Director of 
Property Management, Recreation and Park Department; Leon Gilmore, Western Regional Director, The 
First Tee, Commissioner Jesse Arreguin, Youth Commission; Gene Krekorian, Economics Research 
Associates (ERA); Ken Bruce, Budget Analyst's Office; Theodore Lakey. Deputy City Attorney; Mike Ippocito; 
Mr. A. D. Ward, Director, Allen Junior Golf Program; Duane Perry; Dan DeVries. President, Lincoln Park 
Golf Club; Bo Links; Phil Havlicek; Reola Freeman; Jene Lamison; Xavier Schmidt; Lou Perrone, President. 
Harding Park Golf Club; Connell Craig; Linda Hunter, Neighborhood Parks Council; Josh Kauffman; Sandy 
Tatum; Bud Wilson, Greater West Portal Neighborhood Association. 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 
RECOMMENDED AS AMENDED by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



City and County of San Francisco 



Printed at 4 :.<« I'M on J .J DJ 



Finance Committee Meeting Minutes March 27, 2002 



020197 |GolfFund] 

Supervisors Hall, Daly 

Ordinance amending Chapter 10, Article XIII of the San Francisco Administrative Code by adding Section 
10.100-256 thereto, establishing a San Francisco Recreation and Parks Golf Fund. 
2/4/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 3/6/2002. 
3/18/02, SUBSTITUTED. Supervisor Hall submitted a substitute ordinance bearing same title. 
3/18/02, ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Cohen, Deputy City Attorney; 
Elizabeth Goldstein, General Manager, Recreation and Park Department; Commissioner Lynne Newhouse 
Segal, Recreation and Park Commission; Gary Hoy, Capital Program Manager, Recreation and Park 
Department; Dan McKenna, Acting Superintendent, Recreation and Park Department; Jaci Fong, Director of 
Property Management, Recreation and Park Department; Leon Gilmore, Western Regional Director, The 
First Tee, Commissioner Jesse Arreguin, Youth Commission; Gene Krekorian, Economics Research 
Associates (ERA); Ken Bruce, Budget Analyst's Office; Theodore Lakey, Deputy City Attorney; Mike Ippocito; 
Mr. A. D. Ward, Director, Allen Junior Golf Program; Duane Perry; Dan DeVries, President, Lincoln Park 
Golf Club; Bo Links; Phil Havlicek; Reola Freeman; Jene Lamison; Xavier Schmidt; Lou Perrone, President, 
Harding Park Golf Club; Connell Craig; Linda Hunter, Neighborhood Parks Council; Josh Kauffman; Sandy 
Tatum; Bud Wilson, Greater West Portal Neighborhood Association. 
Continued to 4/3/02. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Hall 



ADJOURNMENT 



The meeting adjourned at 4:58 p.m. 



City and County of San Francisco 6 Printed at 4:59 PM on 3/3/04 



26 
I 01, 



[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



CITY AND COUNTY 




OF SAN FRANCISCO 



BOARD OF SUPERVISORS 

V 

BUDGET ANALYST 

1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



TO: ^Finance Committee 

y 

FROM: Budget Analyst 



SUBJECT: March 27, 2002 Finance Committee Meeting 
Item 1 - File 02-0144 



March 21, 2002 

DOCUMENTS DEPT, 

MAR 2 7 2002 

SAN FRANCISCO 
PUBLIC LIBRARY 



Note: This item was continued by the Finance Committee at its meeting of 
February 27, 2002. 



Department: 
Item: 



Description: 



Department of Parking and Traffic (DPT) 
Parking Authority 

Resolution approving parking rates at the following seven 
City-owned parking facilities: the Civic Center Garage, 
the Ellis O'Farrell Garage, the 16 th and Hoff Street 
Garage, the Performing Arts Garage, the 324 8 th Avenue 
Parking Lot (at 8 th and Clement), the 330 9 th Avenue 
Parking Lot (at 9 th and Clement), and the 421 18 th 
Avenue Parking Lot (at 18 th and Geary). 

In accordance with Section 17.14 of the Administrative 
Code, the Parking and Traffic Commission can establish 
parking rates at City-owned parking faculties on a trial 
basis for a period of up to 360 days, without first 
obtaining approval of the Board of Supervisors. The 
Parking and Traffic Commission has oversight 
responsibility of 40 City-owned parking facilities, of which 
19 are parking garages and 21 are metered parking 
facilities. This responsibility includes recommending 
permanent parking rates to be charged at these parking 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



facilities, which are subject to approval, by the Board of 
Supervisors. 

The proposed resolution would adopt permanent parking 
rates recommended by the Parking and Traffic 
Commission at the seven City-owned parking facilities 
identified above, generally at the same rates which had 
been implemented by the DPT on a trial basis. A 
comparison of the proposed subject recommended 
permanent parking rates to both the original parking 
rates previously approved by the Board of Supervisors 
and to the trial parking rates established by the Parking 
and Traffic Commission, is shown in Attachment I, 
provided by Mr. Steven Lee of the Parking Authority. 
Attachment II, provided by Mr. Lee, explains the 
adjustments between the previously established trial 
parking rates and the proposed subject permanent 
parking rates at the seven City-owned parking facilities. 

According to Mr. Lee, the existing parking rates for the 
seven subject City-owned parking facilities were 
implemented by the DPT on a trial basis as follows: 



Garage 


Trial Period 
Start Date 


360-day Expiration 
Date 


Civic Center Garage 


September 1, 2001 


August 26, 2002 


Ellis O'Farrell Garage 


March 1, 2001 


February 26, 2002 


16 th and Hoff Street Garage 


March 1, 2001; 
December 1, 2001 


February 26, 2002; 
November 26, 2002* 


Performing Arts Garage 


October 1, 2001 


September 25, 2002 


324 8 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 


330 9 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 


421 18 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 



*According to Mr. Lee, trial valet parking rates were implemented on March 1, 2001 and 
increased long-term valet parking rates were implemented on December 1, 2001 for the 
16 th and Hoff Street Garage. 

According to Mr. Lee, the DPT implemented the parking 
rates on a trial basis to meet the Department's objectives 
to reduce traffic, promote short-term transient parking, 
discourage low-occupancy commuter parking and increase 
revenues in City-owned parking facilities. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

As shown in Attachment III, provided by Mr. Lee, the 
subject seven City-owned parking facilities currently have 
a total parking space capacity of approximately 2,600 
parking spaces. According to Mr. Lee, the 2,600 parking 
spaces accommodate both approximately 968 monthly 
parking patrons and approximately 101,500 transient 
parking patrons per month. 

Comments: 1. Attachment III, also contains projected parking 

revenues for FY 2001-2002 and for FY 2002-2003 for the 
subject seven City-owned parking facilities. As shown in 
Attachment III, Mr. Lee estimates that the proposed 
permanent parking rates for all seven City-owned parking 
facilities will generate estimated total gross parking 
receipts of $8,643,600 in FY 2001-2002 or $76,038 more 
than the actual parking receipts of $8,567,562 collected in 
FY 2000-2001. Also shown in Attachment III, Mr. Lee 
estimates that the proposed permanent parking rates for 
all seven parking facilities will generate estimated total 
parking receipts of $8,881,000 in FY 2002-2003 or 
$313,438 more than the actual parking receipts of 
$8,567,562 collected in FY 2000-2001. According to Mr. 
Lee, the projected total parking receipts for the Civic 
Center Garage for FY 2001-2002 and the projected total 
parking receipts for the Ellis O'Farrell Garage were both 
affected by the events of September 11, 2001. 

2. In Attachment II Mr. Lee explains the valet transient 
parking rates at the 16 th and Hoff Street Garage. 

3. Mr. Lee advises that trial monthly carpool rates at the 
Ellis O'Farrell Garage and the 16 th and Hoff Street 
Garage, as shown in Attachment I, were designed to 
encourage carpooling and to open up more parking spaces 
for increased short term parking. To qualify for the 
carpool rate there must be three or more occupants in the 
vehicle. According to Mr. Lee, the "Re-opening Garage 
Fee" rates listed in Attachment I do not accrue to the City 
but rather accrue to the garage operators. 

4. At its meeting of February 27, 2002, the Finance 
Committee requested DPT to update the Committee on 
the status of the eviction of some commercial sub-tenants 
occupying space on the ground floor of the Ellis O'Farrell 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Garage at 121 O'Farrell. Attachment IV, provided by Mr. 
Ron Szeto of DPT, is a memorandum in response to the 
Committee's request with respect to such evictions. 

Recommendation: Approval of the proposed resolution is a policy decision for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

4 











Attachment I 










Page 1 ot 1 


CIVTC CFNTFR GARAGE 
















Proposed 






Original 


Trial 


Permanent 






Parking 


Parking 


Parking 


Transient Parkino 




Rates 


Rates 


Rates 


Day Rates (Opening until 7 


:00 pm) 








0.0 - 1.0 Hour 




1.50 


1.50 


1.50 


1.0 - 2.0 Hours 




3.00 


3.00 


3.00 


2.0 - 3.0 Hours 




4.50 


4.50 


4.50 


3.0 - 4.0 Hours 




6.00 


6.00 


6.00 


4.0 - 5.0 Hours 




8.00 


8.00 


8.00 


5.0 - 6.0 Hours 




10.00 


10.00 


10.00 


6.0 - 7.0 Hours 




12.00 


12.00 


12.00 


Lost Ticket 




18.00 


18.00 


18.00 


Special Event 




8.00 


9.50 


9.50 


Motorcycle 




1.00 


1.00 


1.00 


Student 




5.00 


5.00 


5.00 


Bicycle 




Free 


Free 


Free 


Berkeley Repertory Theatre/Ban 


rsVA 


4.00 


4.00 


Overnight Flat Rate 




N/A 


2.00 


2.00 


Overnight Flat Rate Hours 




(9:00 PM to 


9:00 AM Mon through Fri) 






(9:00 PM to 12:00 PM Sat and Sun) 


Evening Rate? (7:00 pm until C1o<;in°) 








0.0 - 1.0 Hour 




1.50 


1.50 


1.50 


1.0 - 2.0 Hours 




3.00 


3.00 


3.00 


2.0 - 3.0 Hours 




4.50 


4.50 


4.50 


3.0 - 4.0 Hours 




6.00 


6.00 


6.00 


Monthlv Parkino 










Regular 




156.25 


156.25 


156.25 


Resident 




90.00 


90.00 


90.00 


Motorcycle 




25.00 


25.00 


25.00 


Government 




125.00 


125.00 


125.00 


City Departments 




75.00 


75.00 


75.00 


Carpool 




75.00 


75.00 


75.00 


Restricted 




N/A 


75.00 


75.00 


Restricted - (No Parking between 9:00 AM 


to 6:00 PM Monday through Friday) 


Miscellaneous Charges 










Late Monthly Payments 




25.00 


25.00 


25.00 


Lost Access Card 




25.00 


25.00 


25.00 


Damaged Access Card 




25.00 


25.00 


25.00 


Access Card Deposit 




50.00 


50.00 


50.00 


Re-onenino Craracp Fe-? 




50.00 


50.00 


50.00 



ELUS-IIEAR RELI .Carap.f 






Original 

Parking 

Rates 



0.0 
1.0 
2.0 
3.0 
4.0 
5.0 
6.0 



•0 Hour 

2.0 Hours 

3.0 Hours 

4-0 Hours 

5-0 Hours 

6-0 Hours 

7.0 Hours 
Over 7 Hours 

Maximum Mon.-Sat. Day Rate 
Motorcycle Flat Fee 

00 - 1.0 Hour 
1-0 - 2.0 Hours 
2-0 - 3.0 Hours 
3 -° - 4.0 Hours 
4 -0 - 5.0 Hours 
Maximum Sunday Day Rate 

^as^ateilemjuugti 6: nn m „„ ff7 r!r ^cL 

00 - 1.0 Hour 

>-° " 2.0 Hours 

20 - 3.0 Hours 

3 -° - 4.0 Hours 

4 -° - 5.0 Hours 

Maximum Evening Rate 

Monday through Saturday 2Q QQ 

Sunday 

10.00 

MoiiiWy_rla X kii 1 a 

Regular 
Carpool 

Late Monthly Payments 
Lost Access Card 
Damaged Access Card 
Access Card Deposit 
Re-opening Garage Fee 



1.00 

3.00 

5.00 

7.00 

9.00 

12.0C 

15.00 

15.00 

15.00 

3.00 

1.00 
3.00 
5.00 



5.00 

1.00 
3.00 
5.00 



5.00 



Fvhlhlf R 



195.00 

N/A 

N7A 
25.00 

N7A 
25.00 

N/A 



Trial 

Parking 

Rates 

2.00 

3.00 

4.00 

6.00 

9.00 

12.00 

15.00 

20.00 

20.00 

3.00 

1.00 
2.00 
3.00 
4.00 
5.00 
5.00 

1.00 
2.00 
3.00 
4.00 
5.00 
5.00 

25.00 
10.00 

250.00 
125.00 

25.00 
25.00 
25.00 
50.00 
50.00 



Attachment I 
fage 2 of 5 



Proposed 

Permanent 

Parking 

Rates 

2.00 

3.00 

4.00 

6.00 

9.00 

12.00 

15.00 

20.00 

20.00 

3.00 

2.00 
3.00 
4.00 
6.00 

6.00 

1.00 
2.00 
3.00 
4.00 
5.00 
5.00 

25.00 
11.00 

250.00 
125.00 

25.00 
25.00 
25.00 
50.00 
50.00 



SrOKTKU] 14:50 CITY S: CO OF S. F. PARKING DEPT TEL:415 554 9834 



Attachment I 
Page 3 of 5 



Irifh nnri HnfTSh-ffT forage 



Trnrnlrnf ParCIng 

Metered each 30 minute; 

Transient Vehicles Self-Park (2 hour limit} 

(Enforced 9:00 am to 6:00 pm) 

Flat Rate (opening until 6; 00 pm) 
Flat Rate (6:00pm until closing) 
Transient Vehicles - Valet Parking Only 

All Day Rates 

Transient Vih teles • Valet Parking Only 



Proposed 



Original 


Trial 


Trial 


Permanent 


Psrkine 


Parking 


Parking 


Parking 


Rate 


Rates 


Rates 


Rates 


0.25 









2.00 
4.00 



0.0 . 


1.0 


Hour 


1.0 ■ 


2.0 


Hours 


2.0 ■ 


■ 3.0 


Hours 


3.0 ■ 


4.0 


Hours 


4.0 


■ 5.0 


Hours 


5.0 


• 6.0 


Hours 


6.0 


• 7.0 


Hours 


7.0 


■ 24 


Hours 



2.00 
2.00 
2.00 
'3.00 
4.50 
6.00 
8.00 
12.00 



Day Rates (opening until 6:00 pm) 
Transient Vehicles - Valtl Parking Only 



0.0 ■ 


1.0 


Hour 


1.0 


2.0 


Hours 


2.0 


3.0 


Hours 


3.0 


4.0 


Hours 


4.0 


• 5.0 


Hours 



Evening Rates (6:00 pm until dosing) 
Transient Vehicles- Valet Parking Only 
0.0 - 1.0 Hour 
1.0 - 2.0 Hours 
2.0 - 3.0 Hours 
24 Hour maximum 

Lost Ticket 



N7A 



6.00 



12.00 



1.00 
2.00 
3.00 
4.00 
6.00 



2.00 
4.00 
6.00 
12.00 

12.00 



Monthly Parking 

Regular 

Carpool 

Monthly Patron Sclf-rark on Roof Level 

MNcpHanroiK Qarojl 


75.00 
N/A 


75.00 
N/A 


75.00 
50.00 


100.00 
50.00 



Late Monthly Payments 
Lon Access Card 
Domagod Access Card 
Access Card Deposit 
Rc-cpe.iing Fee 



25.00 
25.00 
25.00 
50.00 
50.00 



it vV,:k;* <~ 



PERFORMING ARTS GARAGE 



Attachment I 
Page 4 of 5 



Transient Pairing 

0.0 - 1.0 Hour 

1.0 - 2.0 Hours 

2.0 - 3.0 Hours 

3.0 - 4.0 Hours 

4.0 - 5.0 Hours 

5.0 - 6.0 Hours 

6.0 - 7.0 Hours 

24 Hour Maximum 

Lost Ticket 

Early Bird 

Motorcycle 

Special Event 

Overnight Flat Rate 

Overnight Flat Rate Hours 

Must enter before closing and 

remain ovemisht. 







Proposed 


Original 


Trial 


Permanent 


Parking 


Parking 


Parking 


Rates 


Rates 


Rates 


1.50 


1.50 


1.50 


3.00 


3.00 


3.00 


4.50 


4.50 


4.50 


6.00 


6.00 


6.00 


8.00 


8.00 


8.00 


10.00 


10.00 


10.00 


12.00 


12.00 


12.00 


15.00 


14.00 


14.00 


15.00 


15.00 


14.00 


7.00 


7.00 


7.00 


2.00 


2.00 


2.00 


8.00 


9.50 


9.50 


3.00 


2.00 


2.00 


(From closing 


(From 9:00 PM until 12 n< 


until 9:00 am) 


day the garage is open for 



Monthly Park-ino 

Regular 

City Departments 

Carpool 

Miscellaneous Charges 
Late Monthly Payments 
Lost Access Card 
Damaged Access Card 
Access Card Deposit 
Re-opening Garage Fee 



140.00 
75.00 
75.00 



25.00 
25.00 
25.00 
50.00 
50.00 



140.00 
75.00 
75.00 



25.00 
25.00 
25.00 
50.00 

50.00 



140.00 
75.00 
75.00 



25.00 
25.00 

25.00 
50.00 
50.00 



Attachment I 
ir'age 5 of 5 



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FRANCISCO 



Attachment II 
Page 1 of 2 
City and County of San Francisco 




DEPARTMENT OF PARKING & TRAFFIC 




W1LUE LEWIS BROWN, JR., Mayor 

FRED M. HAMDUN. EXECUTIVE DIRECTOR 

RONALD SZETO, ACTING DIRECTOR, PARKING ALTrHORITY 



MEMORANDUM 



DATE: February 20, 2002 

TO: Maureen Singleton 

Budget Analyst Office 

FROM: Steven Lee /^£ 

Principal Analyst 
Parking Authority 

SUBJECT: File No. 02-0144, Resolution Approving Trail Rates as Permanent 
Rates at Various City Garages and Metered Parking Lots 



The purpose of this memorandum is to address your questions regarding the operations of 
the 1 6 th & Hoff Street Garage, the Revenues Projections for FY 2000-2003 and the 
differences between the Trial Rates and the Proposed Permanent Parking Rates. 

The St. Mary's Square Garage and the 16 th and Hoff Street Garage is jointly operated 
under one Management Agreement, dated October 1, 1997, between Parking Concepts, 
Inc./DAJA, Inc. and the City. The Management Agreement also required the operator to 
manage the 16 th & Hoff Street Garage which at that time was a self-park metered per stall 
facility with controlled monthly parking on the roof level that only required the operator 
to provide a security presence. 

In February 2001, after meeting with the Mission District Community, in October 2000, 
to discuss their concerns regarding quality of life issues that included off-street parking, 
we removed the parking meters and requested the operator to begin valet attendant 
operations at the 16 th & Hoff Street Garage to increase parking availability that 
commenced on March 1, 2001. Under the terms of the Management Agreement, the cost 
of valet attended operation from March 1, 2001 through December 2001 is SI 48,992 for 
the additional services. The Total Parking Receipts (including Parking Tax) of SI 67,925 
from March 1, 2001 though December 1, 2001 covers the expenses by SI 8,93 3. 
However, the 16 th & Hoff Street Garage generated S43.890 in the prior year for the same 
ten months before implementing valet attendant services. 



Attachment II 
Page 2 of 2 



File No. 02-0144 
February 20, 2002 
Page 2 of 2 

We feel that the services provided to the community by the 16 th & Hoff Street Garage 
greatly improves the quality of life for the residents, merchants and visitors of that 
neighborhood and that this program is worthy of continuing despite the initial reduction 
in revenue to the City. 

In regard to the comparison of FY 2000-2001 Actual to the FY 2001-2002 Projected and 
the FY 2002-2003 Projected Parking Receipts, we project an increase of S76,038 or 
9710 th of a percent for FY 2001-2002 compared to FY 2000-2001 Actual. We project that 
FY 2002-2003 will be above the FY 2001-2002 by S237.400 or 2.7 percent. 

Differences between Trial Rates and Proposed Permanent Parking Rates: 

Performing Arts Garage - Lost Ticket from S 15.00 to SI 4.00. The Lost Ticket Rate 
should equal the 7.0-Hour Rate of S12.00 plus the Overnight Flat Rate of 52.00. 

Civic Center Garage - No Difference. 

Ellis O'Farrell Garage - We propose adjusting the Sunday Day Rates to reflect the Mon.- 
Sat. Day Rates with a Maximum Sunday Day Rate of S6.00. The Lost Ticket and 24- 
Hour Maximum of SI 1.00 for Sundays reflect the Maximum Sunday Day Rate of S6.00 
plus the Maximum Evening Rate of S5.00. 

1 6 & Hoff Street Garage - We propose to discontinue the All Day Rates and implement 
Day Rates and Evening Rates to balance the needs of the community and the demand for 
parking at the garage. The initial Trial Rates attracted too many long-term patrons and 
the second Trail Rates caused the garage to be underutilized because the patrons are 
either unwilling or could not afford to pay the rates. Please note that all Transient 
vehicles are valet parked and Monthly patrons self-park on the rooflevel. 

Metered Parking Lots - No Difference. 

Please do not hesitate to call me at 554-9869 if you have any questions or concerns. 



H:\PARX.rNGVRates.Memo to M. Singleton re permanent natrs 2-:0-02.doc 



Attachment III 



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Civic Center 
Ellis OFanell 
16th & Moll Street 
Performing Ails 
324 Btli Avenue Lot 
330 9th Avenue Lol 
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4,205,998 4,063,000 4,250.000 
100,848 207,600 252.000 
1.487.225 1,700.000 1.700.000 
27.087 30,000 31.500 
17.767 16.000 19,000 
21,870 27.000 28,500 


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mi.toroirrau] 16:22 city k co of s. f. parking dept 



S * N FRANCISCO 



TEL ( Attachment IV 

Page 1 ot 4 
City and County of San Francisco 




DEPARTMENT OF PARKING & TRAFFIC 




WILLIE LEW18 BROWN. JR., Mayor 

FRED M. HAMOUN. EXECUTIVE DIRECTOR 

RONALD SZETO, ACTING DIRECTOR, PARKING AUTHORITY 



DATE: 
TO: 

FROM: 

RE: 



March 7, 2002 

Maureen Singleton, Analyst 
Budget Analyst's Office 

Ronald Szelo, Acting Director Dp 
Parking Authority ' ° 

Trial Parking Rates File No. 02-0144 



The purpose of this memorandum is to provide a status update on the 121 O'Farrell Street 
ground floor commercial space per your request. This request was initiated at the 
February 27, 2002 Finance Committee meeting of the San Francisco Board of 
Supervisors in conjunction with consideration of trial parking rates at the Ellis O'Farrell 
Garage (File No. 02-0144). 

It is important to note that the parking rates being considered are only applicable to our 
parking patrons and have no relationship to the ground floor commercial space lease in 
question. 

Pursuant to the 1992 Lease between the City and County of San Francisco and the City of 
San Francisco Ellis-O'Farrcll Parking Corporation (the "Corporation"), the Corporation 
is authorized to lease commercial spaces within the Ellis-O'Farrell Garage (the 
"Garage"). 

At the February 5, 2002 Parking and Traffic Commission meeting, Mr. Jerome Garchik, 
attorney representing 15-20 small business owners of the 121 O'Farrell site 
(subsequently known as 121 O'Farrell Merchants Association "Merchants"), reported 
that his clients are getting evicted. Mr. Garchik further states that the Corporation is 
seeking "dot com" boom or rent increases and is looking for a high profile tenant. Mr. 
Steven Wally, owner of Jewelry By Steven since 1984 at the 121 O'Farrell site, also 
commented at the meeting. Mr. Wally asked the Parking and Traffic Commission to 
provide some assistance to the Merchants from being evicted. The Department of 
Parking and Traffic offered to review the situation and provide assistance to the small 
business owner. 



Id1<!l K^.BADW 



4i,lln IT, 



(Mim_(C7P 



HAH -.07" 02 (Ml 16:22 CITY k CO OF S. F. PARKING DEPT ... Attachment IV 

Page 2 ot 4 



Maureen Singleton 

3-7-02 

Page 2 of 4 



Findings 

• The Corporation has a lease agreement with Wholesale Jeweler's Exchange, LLC. 
("WJE") for the 121 O'Farrcll commercial space (4,483 square feet). The WJE sub- 
leases the commercial space to the Merchants. 

• On May 1, 2000, the Corporation and WJE agreed to amend the original 1997 lease to 
terminate said lease on May 3 1 , 200 1 . Thereafter, the lease was amended to a month- 
to-monlh basis with either party having the right to terminate with 60-days written 
notice. Subsequently, on December 24, 2001, WJE gave termination notices to the 
Corporation and to the Merchants effective February 28, 2002. In addition, WJE 
gave at least three (3) other updates/notices to the Merchants regarding the 
termination of the lease. (Attached are the Notices) 

• Corporation, in preparation of renting the 121 O'Farrell commercial space, started a 
solicitation process for an exclusive broker. 

• At die Corporation's June 28, 2000 meeting, the Corporation selected Blatteis Really 
to advertise the commercial space and subsequently executed a 6-month listing 
agreement commencing September 5, 2000. 

• Blatteis advertised die commercial space and in October 2000, posted "For Lease" 
signs above the main entrance of the commercial space. 

• Some of the small business owners of die 121 O'Farrell space started searching for a 
new business location. 

• In February 200 1 , the Parking Corporation granted Blatteis an extension to the listing 
agreement until September 5, 200 1 . 

• In September 2001, the tenant of the 133 O'Farrell commercial space (1,127 square 
feet) was evicted for non-payment of rent and the 133 O'Farrell site became 
available. 

• In September 2001, Blatteis identified Saab Cars USA, Inc. as the only interested 
party, with sufficient funding, for the 121 O'Farrell site. Since then the Parking 
Corporation has been in a good faith negotiation with Saab. Although there are not 
any explicit non-interference clause, the good faith negotiation implies that the 
Corporation and Saab would negotiate until a conclusion is reached. 

• On October 15, 2001, subject to the Saab good faith negotiations, the Corporation 
executed a listing agreement with a new broker, DiChiara & Wright Realty Services 
for the marketing of both the 121 and 133 O'Farrell sites. 



Attachment IV 
Page 3 of 4 



Maureen Singleton 

3-7-02 

Page 3 of 4 



On October 17, 2001 Board of Directors meeting, the broker presented eight offers 
(of which three were made by 121 O'Farrell small business owners). In November 

2001, the Corporation executed a ten (10) year lease, commencing on January 1, 

2002, for the 133 O'Farrell site with a partnership comprised of an established outside 
jeweler and one of the small business owners of the 121 O'Farrell site. The small 
business is and still will continue to sub-lease space from WJE until the build-out of 
the 133 O'Farrell site is completed (until March 31, 2002). The small business owner 
reported that several other merchants verbally agreed to rent a portion of the 133 
O'Farrell site. 

On December 24, 2001, as mentioned above, WJE served notice of termination 
(effective February 28, 2002) to the Merchants for the 121 O'Farrell site. 

On February 5, 2002 Parking and Traffic Commission meeting, representative of the 
small business owners commented that they were being evicted from a public 
property without proper notice and asked the Parking and Traffic Commission for 
assistance. 



Options 

• What appears as a straightforward request by the Merchants became very complicated 
as we began our assistance. 

• There are seven (7) separate parties involved in these two commercial spaces. The 
City, the Corporation, WJE, the Merchants, the brokers, Saab, and the partners of the 
133 O'Farrell site. 

• The City and the Corporation do not have legal authorization to dictate terms and 
condition involving the contractual relationship between WJE and the Merchants. 

• If the City directs the Corporation to terminate their good faith negotiations with Saab 
and conduct exclusive negotiations with the Merchants, then the City would be 
interfering in a contractual relationship and together with the Corporation could be 
liable for all costs incurred by Saab and brokers. Also, the City maybe liable for 
damages to the partners of the 133 O'Farrell site. Furthermore, the City would 
reward tenants who failed to act responsibly in seeking new business locations and 
would punish the 133 O'Farrell partners merchants who did act responsibly in 
moving into the 133 O'Farrell site. If the City decides to pursue this option, the 
Department of Parking and Traffic recommends that the Merchants shall indemnify 
the City and the Corporation, and that the Merchants shall be fully responsible for any 
and all subsequent liability, including but not limited to, damages mentioned above. 



MAP..-Q""02ITHU) 16:22 CITY k CO OF S. F. PARKING DEPT Attachment IV 

Page A oiE 5 



Maureen Singleton 

3-7-02 

Page 4 of 4 



In addition, the Merchants shall secure proper insurance and bonds to fulfill the 
indemnification requirement. 

Since the lease agreement with WJE would have expired on February 28, 2002, the 
Department of Parking and Traffic encouraged the Corporation and WJE to extend 
the lease agreement for 60-90 days. The Corporation through WJE proposed a 90- 
day extension for the Merchants under the same terms and conditions. 

The Merchants are urged to use this time to explore any and all options. The 
Department of Parking and Traffic suggests that the Merchants contact the Fifth and 
Mission Garage for available commercial spaces as another option. . 

If the City allows the Corporation to continue their good faith negotiations with Saab, 
the City would not be liable for any potential damages. The Merchants would have at 
least 90 days to explore other options, Since the market conditions are favorable to 
renters, the Merchants may find a better location at a reasonable rent. The partners of 
133 O'Fanrell would continue to conduct business; as usual from the 121 or 133 
OTarrell sites. If the good faith negotiations with Saab were to break off naturally, 
then the Merchants will have a second opportunity to participate for this site in a 
competitive process. 



Cc: f red Hamdun, Executive Director, DPT 
Diana Hammons, DPT 
Daniel Hwang, Small Business 
Richard Dole, Ellis-O'Farrell Corporation 
Honorable Membera, Parking and Traffic Commission 
Honorable Members, Board of Supervisors 



H'l'ARXrNGMlalciVmomo la M .inslston re 121 O'porrcll (EO).Joe 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Item 2 - File 02-0390 

1. The proposed ordinance would amend Section 16.703 of the Administrative 
Code to approve the City's FY 2002-2003 Health Service System plans and rates of 
contributions, as adopted by the Health Services Board, to be paid by members of 
the System. The members of the System include employees and members of Boards 
and Commissions, retirees, and the spouses, domestic partners, dependents, and 
surviving spouses of these groups for the City and County of San Francisco, 
Community College District, and the San Francisco Unified School District. 

Health Plans 

2. The Board of Supervisors previously adopted a resolution (File 02-0096) 
setting the City's contribution to the Health Service Fund for FY 2002-2003 at 
$246.69 per month for each member. The City's contribution was established in 
accordance with Charter Sections A8.423 and A8.428, which set the average 
contribution rate based on a survey of the 10 most populous counties in California 
(excluding San Francisco). The City's contribution of $246.69 per month ($2,960.28 
annually) represents an increase of $32.76 per month, or approximately 15.3 
percent, from the FY 2001-2002 rate of $213.93 per month ($2,567.16 annually). 

3. Once the City's contribution is established, member contributions are 
calculated by the Health Service System actuary, Towers Perrin, Consulting 
Actuaries, in order to ensure that contributions from all sources will be adequate to 
support anticipated claims for the upcoming fiscal year. This report is based on data 
provided by Towers Perrin in a March 8, 2002 letter to the Board of Supervisors. 
The proposed ordinance would establish member contribution rates for FY 2002- 
2003 in accordance with Charter Sections A8.421 and A8.422. Contribution rates 
vary depending upon: (1) the member's status (active employee, retiree, etc.); (2) 
whether or not that individual has Medicare coverage; and (3) which of the City's 
health plans the member elects to join. The actuarial report and details of the 
member contribution rates are contained in the file of the Clerk of the Board. 

4. Ms. Yvonne Hudson of the Health Service System advises that as of March 
1, 2002, 38,474 active employees, including San Francisco Unified School District 
and the Community College District employees, were covered by the System, with 
an additional 1,399 who chose not to be covered but who may request coverage in 
the future. Ms. Hudson advises that the System covers 15,368 retirees and that an 
additional 977 retirees are eligible to request coverage. 

The City Health Plan (which is administered by the City's Health Service 
System) and Kaiser, Health Net, and Blue Shield (all HMOs) will be offered in FY 
2002-2003. The Health System Board voted to offer Blue Shield coverage to retirees 

Board of Supervisors 
Funr-ET Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



for the FY 2002-2003 year to increase the options available to retirees. In FY 2001- 
2002, retirees' plan choices were limited to the City Health Plan, Health Net and 
Kaiser. 

5. Changes to the City Health Plan benefits in FY 2002-2003 include: 

• Coverage for hearing aids was increased to a $2,500 maximum benefit 
during any three-year period. Hearing aids were previously subject to an 
annual $1,000 maximum. 

6. The following changes were made in benefits for FY 2002-2003 HMO 
members: 

Blue Shield 

• Pharmacy copay increased from $5 to $10 for formulary 1 brand-name 2 
drugs and $15 to $20 for non-formulary drugs. The pharmacy copay for 
formulary generic 3 drugs remained at $5. 

• Hearing aid benefit limit increased from $1,000 to $2,500 per three-year 
period. 

• Infertility benefit modified from one course of treatment per plan year to 
three courses of treatment per lifetime. 

Health Net 

• Pharmacy copay increased from $5 to $10 for formulary brand-name 
drugs and $15 to $20 for non-formulary drugs. The pharmacy copay for 
formulary generic drugs remained at $5. 

Kaiser 

• Pharmacy copay increased from $5 to $10 for brand-name drugs. The 
pharmacy copay for generic drugs remained at $5. 

• Hearing aid benefit limited to $2,500 every three years. Previously the 
benefit was unlimited. 

» Infertility benefit modified from gamete intrafallopian transfer (GIFT) 
only to three courses of in-vitro fertilization, GIFT or zygote intrafallopian 
transfer (ZIFT) per lifetime at 50% copay. 



1 A formulary is a list of both generic and brand name drugs that are preferred by a health plan. 
Health plans will choose formulary drugs that are just as safe and effective as drug alternatives but 
cost less. 

2 A brand-name drug is supplied by one company (the pharmaceutical manufacturer). The drug is 
protected by a patent and is marketed under the manufacturer's brand name. 

3 A generic medication is a copy of the brand name drug that can be sold after a manufacturer's drug 
patent expires. A generic drug is marketed under its chemical name. 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



7. A comparison of the FY 2001-2002 monthly rates to be paid by active City 
employees with the FY 2002-2003 rates adopted by the Health Service Board is 
shown on Table 1: 

Table 1 
Monthly Health Plan Rates to be Paid by Active City Employees 
FY 2001-2002 and FY 2002-2003 





2001-2002 


2002-2003 


Monthly 


Percentage 




Monthly 


Monthly 


Increase/ 


Increase 




Rates 


Rates 


(Decrease) 


(Decrease) 


Citv Health Plan 










Single Employee 


$104.86 


$118.85 


$13.99 


13.3% 


Employee plus one dependent 


328.72 


482.39 


153.67 


46.7% 


Employee plus two dependents 


559.47 


774.81 


215,34 


38.5% 


Kaiser 










Single Employee 


0.00 


0.00 


0.00 


0.0% 


Employee plus one dependent 


203.25 


237.10 


33.85 


16.7% 


Employee plus two dependents 


371.95 


433.89 


61.94 


16.7% 


Health Net 










Single Employee 


3.27 


18.07 


14.80 


452.6% 


Employee plus one dependent 


219.51 


281.87 


62.36 


28.4% 


Employee plus two dependents 


399.66 


501.45 


101.79 


25.5% 


Blue Shield 










Single Employee 


5.17 


3.10 


(2.07) 


(40.0%) 


Employee plus one dependent 


223.28 


251.89 


28.61 


12.8% 


Employee plus two dependents 


404.24 


458.02 


53.78 


13.3% 



See Comment No. 1 for discussion of the potential impact of MOUs on 
employee's contributions. 

8. A comparison of the FY 2001-2002 monthly rates paid by retired City 
employees who are enrolled in the Health Service System with the proposed FY 
2002-2003 rates adopted by the Health Service Board is shown on Table 2 on the 
following page: 



Board of Supervisors 
Budget An \t.yst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Table 2 

Monthly Health Plan Rates to be Paid by Retired City Employees 

FY 2001-2002 and FY 2002-2003 



City Health Plan 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 

Kaiser Health Plan 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



2001-2002 

Monthly 

Rates 

$52.43 
164.36 

27.43 
127.31 



2002-2003 

Monthly 

Rates 

$59.42 
241.19 

32.42 
166.29 



Monthly Percentage 
Increase/ Increase 
(Decrease) (Decrease) 



$6.99 
76.83 

4.99 
38.98 



13.3% 
46.7% 

18.2% 
30.6% 



0.00 


0.00 


0.00 


0.0% 


101.62 


118.55 


16.93 


16.7% 


0.00 


0.00 


0.00 


0.0% 


52.73 


94.71 


41.98 


79.6% 



Health Net 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 

Blue Shield 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



1.63 


9.03 


7.40 


454.0% 


109.75 


140.93 


31.18 


28.4% 


0.00 


0.00 


0.00 


0.0% 


94.63 


136.02 


41.39 


43.7% 



1.55 
125.94 

0.00 
183.73 



9. The increases for Medicare retirees are dictated largely by the formula by 
which HMOs are reimbursed for Medicare members by the Federal Centers for 
Medicare and Medicaid Services (CMS, formerly the Federal Health Care Financial 
Administration). In the past, CMS reimbursement enabled the HMOs to provide 
health care to Medicare retirees at a reasonable cost; however, the Federal 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Balanced Budget Act of 1997 changed the formula used to calculate the HMOs' 
reimbursements. The result was that CMS reimbursements are no longer keeping 
pace with the cost of health care, and the HMOs make up the shortfall by increasing 
premiums paid by retired City employees. 

VISION PLAN BENEFITS 

10. Members enrolled in any of the medical plans offered by the Health 
Services System also receive vision benefits. All Kaiser members receive vision 
benefits from Kaiser. All other medical plan enrollees receive vision benefits insured 
by Vision Service Plan (VSP). Vision plan enrollment is combined with medical plan 
enrollment, and the cost of the vision benefit is a component of the cost of the 
medical plan. 

VSP offered the City a 7% decrease in premium rates, with the new rates 
guaranteed for 24 months through June 30, 2004. There were no changes in the 
benefits offered by VSP. 

DENTAL PLAN BENEFITS 

11. The Health Service System will continue to offer three dental plans to 
members: an indemnity plan administered by Delta Dental and two prepaid plans, 
PMI and Pacific Union. The City pays the full cost of Dental benefits for active 
employees. The Health Service System, effective July 1, 2001, no longer offers 
dental coverage to the Community College and San Francisco Unified School 
District because these employees are offered dental coverage through their 
respective employers. 

According to Ms. Hudson, as of March 1, 2002, 28,773 active employees were 
enrolled in City dental plans and 6,518 retirees were enrolled in dental plans. 

12. The Delta Dental Plan for active employees is self-insured and Towers 
Perrin's evaluation of claim experience determined that no change should be made 
in the rates used by the City to fund the plan. In addition, Delta Dental requested 
no change in the rates for the insured plan for retirees. PMI requested no change in 
active employees and retirees rates. Pacific Union requested no change in active 
employees and retirees rates. 

13. While retirees may choose from the same three dental plans, the benefits 
and rates differ from those for active employees. 



Board of Supervisors 

Rfir.PT Akm.yp" 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



14. A comparison of the FY 2001-2002 and FY 2002-2003 monthly premium 
rate schedules for employer contributions of the three dental plans is shown below 
in Table 3, and indicates that there would be no changes in dental plan rates: 

Table 3 
Monthly Dental Plan Rates to be Paid by the City for 
Active City Employees FY 2001-2002 and FY 2002-2003 



Delta Dental 

Single Employee 

Employee plus one dependent 

Employee plus two dependents 

PMI 

Single Employee 

Employee plus one dependent 

Employee plus two dependents 

Pacific Union 

Single Employee 

Employee plus one dependent 

Employee plus two dependents 



2001-2002 2002-2003 Monthly Percentage 



Monthly 


Monthly 


Increase/ 


Increase 


Rates 


Rates 


(Decrease) 


(Decrease) 


$55.26 


$55.26 


$0.00 


0.0% 


90.80 


90.80 


0.00 


0.0% 


136.51 


136.51 


0.00 


0.0% 


22.17 


22.17 


0.00 


0.0% 


36.58 


36.58 


0.00 


0.0% 


54.09 


54.09 


0.00 


0.0% 


25.71 


25.71 


0.00 


0.0% 


42.44 


42.44 


0.00 


0.0% 


62.76 


62.76 


0.00 


0.0% 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



15. A comparison of the monthly premium rates to be paid by retired City 
employees for the FY 2001-2002 and FY 2002-2003 dental plans is shown below in 
Table 4, and reflects that there would be no changes in dental plan rates: 

Table 4 

Dental Plan Monthly Premiums to be Paid by Retired City Employees 

FY 2001-2002 and FY 2002-2003 



Delta Dental 
Single Retiree 
Retiree plus one dependent 
Retiree plus two dependents 

PMI 

Single Retiree 

Retiree plus one dependent 

Retiree plus two dependents 

Pacific Union 
Single Retiree 
Retiree plus one dependent 
Retiree plus two dependents 

Comments 



2001-2002 


2002-2003 


Monthly 


Percentage 


Monthly 


Monthly 


Increase/ 


Increase 


Rates 


Rates 


(Decrease) 


(Decrease) 


$33.76 


$33.76 


$0.00 


0.0% 


67.60 


67.60 


0.00 


0.0% 


102.11 


102.11 


0.00 


0.0% 


28.09 


28.09 


0.00 


0.0% 


46.35 


46.35 


0.00 


0.0% 


68.55 


68.55 


0.00 


0.0% 


15.24 


15.24 


0.00 


0.0% 


25.16 


25.16 


0.00 


0.0% 


37.20 


37.20 


0.00 


0.0% 



1. Many of the City's MOUs include provisions whereby the City pays a 
portion of the employee's cost for health and dental benefits. Such payments by the 
City are not reflected in the data provided by the Health Service System shown in 
the tables of this report. Ms. Donna Marchuk of the Department of Human 
Resources advises that the majority of City workers are covered by MOUs which 
provide in FY 2002-2003 that the full employee premium for single employees is 
paid by the City and up to 75 percent of the rate of the employee costs for Kaiser 
coverage for the employee plus two dependents is paid by the City. Ms. Hudson 
notes that 75 percent of the employee costs for Kaiser coverage for the employee 
plus two dependents was $278.96 in FY 2001-2002 (.75 x $371.95) and will be 
$325.42 in FY 2002-2003 (.75 x $433.89). 

As a result, contrary to the data shown in Table 1, many of the City's MOUs 
provide that single employees enrolled under the City Health Plan paid nothing in 
FY 2001-2002 (instead of a rate of $104.86 per month) and would again pay nothing 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

under the proposed FY 2002-2003 rates (instead of the rate of $118.85 per month). 
Furthermore, many of the City's MOUs provided that employees with one 
dependent enrolled in the City Health Plan in FY 2001-2002 paid $49.76 per month 
(City Health Plan rate of $328.72 less the City paid benefit of $278.96) instead of 
$328.72 and would pay $156.97 per month (City Health Plan rate of $482.39 less 
the City paid benefit of $325.42) instead of $482.39 in FY 2002-2003. 

Ms. Marchuk reports that, to date, two of the City's 46 MOUs remain to be 
renegotiated this year and each will be retroactive, covering the period of July 1, 
2001 through June 30, 2003. Ms. Marchuk also notes that the Underrepresented 
Employees Ordinance remains to be renegotiated for FY 2002-2003. These MOUs 
and the Underrepresented Employees Ordinance will be subject to the approval of 
the Board of Supervisors. 

2. The Towers Perrin report notes several actions intended to minimize the 
potential for errors in employee communications and in plan administration: 

• All vendors were asked to provide their signed acceptance of the rates to be 
used by the Health Service System. These approvals have been obtained and 
are on file with the Health Service System staff. 

• Towers Perrin is reviewing the contribution tables to be included in the open 
enrollment communications that will be provided to employees and retirees. 

• Towers Perrin will be reviewing the rates entered into the Health Service 
System's Management Information System (MIS) to ensure the accuracy of 
the data entered into the MIS, including health care plan costs, City 
contributions and employee contributions. 

3. The Towers Perrin letter concludes that the actions taken by the Health 
Service Board in the areas of benefit design, rating and reserving are consistent 
with Towers Perrin's recommendations and conform to a reasonable actuarial 
standard of plan management. Mr. Michael Kramer of Towers Perrin advises that 
"reserving" means the calculation of the amount of money that the Health Services 
Trust Fund needs to maintain to cover its obligations for claims incurred but not yet 
paid and for anticipated fluctuations in claims. 

Recommendation 

Approve the proposed ordinance. 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Item 3 - File 02-0410 
Department: 

Item: 



Description: 



Municipal Transportation Agency (Muni) 

Resolution authorizing a leveraged lease-leaseback 
transaction of up to 118 Muni light rail vehicles. The 
proposed resolution approves a variety of agreements 
required to execute the proposed transaction. The 
proposed resolution further: 

(1) approves the indemnification of various parties 

(2) acknowledges the waiver of the City's right to a jury 
trial under certain circumstances 

(3) acknowledges proposed waiver requirements pursuant 
to Sections 12B.5-l(d) and 12C.5-l(d) of the San 
Francisco Administrative Code with regard to certain 
agreements authorized by the proposed resolution 

(4) approves and authorizes the execution and delivery of 
any document necessary to implement the proposed 
resolution 

(5) ratifies and approves any action heretofore taken in 
connection with the transaction contemplated by the 
proposed resolution; and related matters. 

The proposed resolution authorizes Muni to conduct a 
leveraged lease-leaseback transaction of up to 118 of its 
Breda light rail vehicles. The Breda vehicles are currently 
in service on Muni Lines J, K, L, M, and N. The purpose 
of the proposed transaction is to provide one-time revenue 
to the City (Muni), estimated by Muni to be 
approximately $33 million. (See Comment No. 3.) 

The purpose of the proposed transaction is to leverage an 
asset that Muni already owns to generate one-time 
revenue of approximately $33 million. To do this, Muni 
would transfer the "tax ownership" of up to 118 of its 
Breda Light Rail Vehicles to a group of private investors 
consisting of CIBC Capital Corporation, Comerica 
Leasing Corporation, Wells Fargo Bank Minnesota, N.A. 
Australia and New Zealand Banking Group Limited. For 
purposes of the proposed transaction, this group of private 
investors is collectively known as the Equity Investors. 
Such a transfer would allow the private investors to 
depreciate the vehicles and deduct transaction-related 
expenses on their Federal income tax return and thereby 

Board of Supervisors 

F*'r>GET AN M YST 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



defer payment of Federal income taxes. In exchange for 
this benefit, the Equity Investors would pay Muni a one- 
time cash payment of approximately $33 million. 

Through the proposed transaction, Muni would lease up 
to 118 Breda LRVs that it currently owns to a Trust 
established by the Equity Investors (CIBC World 
Markets, Comerica, Wells Fargo, and ANZ). As explained 
in Attachment IV, six trusts would actually be formed. 
For the purpose of simplicity, this report refers to a single 
Equity Investors' Trust. The Trust would pre-pay Muni a 
lump sum representing the present value of the lease 
payments over the life of the lease, under the Head Lease 
agreement (with Muni as Lessor and the Trust as Lessee). 
The lump-sum payment would total $388.1 million and 
consist of approximately $102.6 million in an equity 
contribution to the Trust by the Equity Investors and a 
loan from a private Lender (FSA Global Funding Limited) 
to the Trust of approximately $285.5 million. The Trust 
would, in turn, sublease the vehicles back to Muni. 

Muni would deposit $355.1 million into two separate 
escrow accounts. One such account would be to repay the 
$285.5 million portion of the lump-sum payment received 
from the loan to the Equity Investors. The other escrow 
account would be $69.6 million to repay the equity portion 
of the lump-sum payment. The $69.6 million, combined 
with interest earnings, would provide sufficient monies to 
repay the $102.6 million equity contribution by the Equity 
Investors. The $33 million difference between the $388.1 
million lump-sum payment to Muni and the $355.1 
million that Muni would deposit in escrow accounts 
results in the net one-time revenue gain to Muni. As 
stated previously, the actual one-time revenue benefit to 
Muni may be more or less than $33 million, depending 
upon interest rates on the closing date of the transaction. 
The monies in escrow would fund the 27 annual sublease 
payments and the purchase option to be made by Muni to 
the Trust (see Comment No. 15). 

Ms. Harrington advises that the equity portion would be 
invested in Refcos or other U.S. government full faith and 
credit-backed obligations. Ms. Harrington advises that 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Refcos are securities issued h}' the Federal Resolution 
Trust Corporation. The loan contribution would be placed 
with a Debt Payment Undertaker, Premier International 
Funding Co., under a payment agreement, guaranteed by 
Financial Security Assurance (FSA). 

The equity escrow deposit and its related intei-est 
earnings, combined with the loan portion escrow deposit, 
would fund the sublease payments that Muni would be 
required to make to the Trust established by the Equity 
Investors, over the 25 to 27-year term (depending upon 
the age of the vehicle being leased) of the sublease. Thus, 
the payment obligations over the life of the sublease 
would be "economically defeased." 1 (See Comment No. 
7(e). Ms. Harrington advises that Muni's external 
auditors have advised Muni that the annual sublease 
payments would not have to be appropriated through 
Muni's annual operating budget. 

The Equity Investors could then depreciate the assets for 
Federal income tax purposes and thus defer payment of 
Federal income taxes. The Equity Investors would also be 
able to defer payment of Federal income taxes by 
deducting the interest expense associated with the loan 
portion of the lump-sum payment to Muni as well as 
transaction-related expenses. Ms. Harrington advises that 
the total estimated tax benefits to the Equity Investors 
has not been disclosed to Muni but that an 8 percent rate 
of return is the benchmark rate for this type of 
transaction. Based on the amount of the $388.1 million 
lump-sum payment to Muni and an 8 percent rate of 
return, the Equity Investors would realize approximately 
$31 million in tax benefits. 

Since "tax ownership" of the up to 118 Breda LRVs, but 
not actual ownership, would be transferred to the Equity 
Investors, Muni would be required to maintain and repair 



1 Defease- to place the proceeds from the lump sum payment in an ^revocable trust and invest it in U.S. Treasury 
securities or U.S. Agency securities backed by the full faith and credit of the U.S. government. The proceeds 
invested, and the related interest earnings, would fund the required sublease payments and the purchase option. 
Thus, the City's payment obligation would be "economically defeased." It would not, however, be legally defeased 
because the City would remain responsible for making the sublease payments over the life of the sublease. 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

the subject vehicles. Attachment IV describes such 
maintenance and repair obligations in detail. 
Attachments III and IV, provided by Muni, also include 
additional detail regarding the proposed transaction. 

In response to the request of the Budget Analyst, the 
following documents were prepared by Muni and are 
included as Attachments to the Budget Analyst report: 

Attachment I- Muni's Estimated Transaction Expenses 

Attachment II- Muni's Estimated "Broken Deal Costs" 

Attachment III- Memo from Muni to the Finance 

Committee providing an overview of the proposed 

transaction 

Attachment IV- Memo from Muni to the Finance 

Committee providing a detailed explanation of the 

transaction 

Attachment V- Memo from Muni to the Finance 

Committee regarding Muni's proposed uses of the 

anticipated one-time revenue 

Attachment VI- Attachment from Muni showing the 

termination value payable by Muni to Strip Surety Policy 

Provider(s) if the proposed transaction terminates at any 

point in time over the life of the transaction 

Attachment VII- Table from Muni showing other transit 

jurisdictions that have completed transactions similar to 

the one proposed 

Attachment VIII- Memo from Muni to the Finance 

Committee detailing the bid processes used to select the 

Equity Investors and the Lender/Surety Provider and 

Payment Undertaker 

Attachment IX- Letters from the Federal Transit 

Administration (FTA) to Muni approving the proposed 

transaction 

Comments: 1. Ms. Harrington advises that the City, rather than 

Muni, would be the signatory to the proposed transaction. 
However, she further advises that Muni intends to bear 
the financial risks (see Comment No. 7) of the 
transaction, barring catastrophic events since Muni would 
receive the financial benefits of the transaction (the one- 
time revenue). Ms. Harrington explains that Strip Surety 
Policy is similar to "gap" insurance coverage and it 

Board of Supervisors 

Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



protects the Equity Investors should the transaction 
terminate early and the funds in escrow are insufficient to 
repay the Equity Investors the amount they are owed. Ms. 
Harrington further explains that if a Strip Surety Policy 
provider is required to repay the Equity Investors, the 
Strip Surety Policy provider could then seek 
reimbursement from the City through a legal claim 
against the City. 

2. Ms. Harrington advises that while the original intent of 
the proposed transaction was to provide funds for safety 
and security-related capital projects, Muni now 
anticipates that up to approximately $15.9 million of the 
anticipated $33 million in one-time revenue may be used 
to cover anticipated shortfalls and mandatory expenditure 
increases in Muni's FY 2001-2002 current operating 
budget and the FY 2002-2003 operating budget. As stated 
on page 2 of Attachment V provided by Muni, Muni 
anticipates a revenue shortfall of approximately $17 
million in FY 2001-2002. In FY 2002-2003, Muni 
anticipates a revenue shortfall of approximately $23.5 
million as well as mandated expenditure increases of 
approximately $15.2 million, resulting in an anticipated 
budget gap of approximately $38.7 million. Attachment V 
explains how Muni anticipates using approximately $5 
million of the proposed one-time revenue of $33 million to 
balance its FY 2001-2002 budget and approximately $10.9 
million of the proposed one-time revenue of $33 million to 
balance its FY 2002-2003 budget. Ms. Harrington advises 
that the remaining approximately $17.1 million ($33 
million less $5 million less $10.9 million) (or more if the 
projected budget shortfalls are less than anticipated) 
would be available to fund capital projects. 

Ms. Harrington further advises that using a portion of the 
revenues from the proposed transaction would be 
consistent with the November 1999 Proposition E 
requirement that Muni seek alternative revenues to 
alleviate its reliance on the General Fund. Ms. 
Harrington advises that if the current recession is longer 
or more severe than anticipated, Muni would implement 
additional budgetary reduction measures in FY 2002-2003 



Board of Supervisors 
Budget Analys^ 



MAR-22-2002 12=35 HRRUEY M ROSE ftCC CORP 415 252 04S1 P. 02 

Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

or beyond. Ms, Harrington advises that Muni is currently 
developing such measures. 

3. Ms. Harrington advises that the proposed transaction 
is highly sensitive to changes in interest rates for the 
types of securities in which the lump sum payment would 
be invested in either U.S. Treasury securities or U.S. 
Agency securities. Ms. Harrington further advises that 
Muni currently estimates that the one-time revenue will 
be $33 million. However, Ms, Harrington further advises 
that the actual one-time revenue will depend upon 
interest rates when the transaction closes (or is finalized). 
Ms. Harrington advises that Muni anticipates that this 
will occur by April 12, if this resolution is approved by the 
Board of Supervisors. Ms. Harrington explains that the 
estimate of $33 million assumes an interest rate of 5.80 
percent for the equity portion of the lump-sum payment 
that is placed in escrow. 

Mr. Murphy McCalley of McCalley Consulting, a financial 
advisor to Muni, explains that the relationship between changes 
in interest rates and changes in the one-time revenue which 
Muni would receive is that a 100 basis point 2 change in interest 
rates would have a 400 basis point impact to the one-time 
benefit in the same direction. This means, for example, that if 
the interest rates decrease 10 basis points or 0.10 percent from 
the assumed 5.80 percent to 5.70 percent, the one-time revenue 
would be 40 basis points or 0.40 percent less than the 
approximately $33 million if rates were 5.80 percent. This would 
mean that the one-time revenue would be $1,320,000 less than if 
the rates were 5.80 percent on the closing date rather than 5.70 
percent. Likewise, if the rates are higher than 5.80 percent, 
Muni would receive more than the estimated $33 million. The 
interest rate in effect on the date of the closing would determine 
the amount of the one-time revenue that Muni receives. Until 
the closing date, the exact amount of one-time revenue that 
Muni would receive will not be known. The resolution states 
that the proposed transaction "shall generate a net 



2 Basis point- the smallest measure used in quoting yields on bonds and notes. One basis point is 0.01% of yield. 
Thus, 100 basis points is 1%. 

Board of Supervisors 

Budget Analyst 

30 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



present value benefit to the City of not less than 6 
percent." Ms. Harrington advises that Muni's estimate of 
$33 million in one-time revenue is based upon an 
assumption of a net present value benefit of 
approximately 8.5% percent of the appraised value of up 
to 118 Breda LRVs of $388.1 million. 

4. Ms. Monique Moyer of the Mayor's Office of Public 
Finance advises that she supports the proposed 
transaction as a way for Muni to raise a significant 
amount of cash by leveraging an asset that it already 
owns. She further notes that while the length of the 
transaction is quite long (the sublease term is 25 to 27 
years, depending on the estimated useful life of a given 
vehicle), she believes it is acceptable because Muni is a 
perpetual entity. She advises that she believes the 
primary risk is of early termination (see Comment No. 
7(a)(1) and Attachment IV). She further advises that the 
proposed transaction will constrain the Board of 
Supervisors ability to dispose of the Breda LRVs prior to 
the end of the sublease term. 

Ms. Moyer further advises that while she believes the 
transaction has much more risk than the City is 
accustomed to taking, the Muni finance and legal team 
has carefully analyzed those risks and Muni is satisfied 
that such risks are reasonable. Ms. Moyer further advises 
that she has discussed the risks and proposed mitigation 
of those risks with Muni's staff and advisors as well as 
with the Controller. However, she advises that she has 
not reviewed the documentation for the transaction and 
thus, there could be other terms of which she is not 
aware. She further states that if proposed transaction 
terminates early, the cost to the City would be enormous. 
However, she adds, the likelihood of the transaction 
terminating early is extraordinarily remote and some of 
the circumstances under which it could terminate are 
within Muni's control. Some are not, however, she adds. 

5. Ms. Harrington advises that if the Board of Supervisors 
or Muni wanted to replace the Breda LRVs before the end 
of the term of proposed transaction, it could do so but it 
would then have to maintain and store the leveraged 

Board of Supervisors 
Bur»GET Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



LRVs until the purchase option (see Comment No. 15) is 
exercised at the end of the sublease term. Ms. Harrington 
notes, though, that the fleet could be sub-subleased to 
another U.S. transit system before the end of the 
proposed sublease. Ms. Harrington advises that Muni 
would require the sub-subleasing transit agency to 
maintain and insure any vehicles, but Muni would retain 
the legal sublease obligations regarding maintenance and 
insurance in the event the sub-sublessee failed to meet 
those requirements. Ms. Harrington advises that the 
Santa Clara Valley Transit Authority is in the process of 
negotiating a sub-sublease of its obsolete equipment to 
another transit agency in order to avoid terminating its 
tax advantage lease. 

Ms. Harrington further advises that aside from the 
Boeing fleet of light rail vehicles that were recently 
retired, Muni has historically retained vehicles for 30 
years and therefore, the likelihood of replacing the LRVs 
before the end of the sublease term would be remote. Ms. 
Harrington explains that Muni experienced significant 
reliability problems with the Boeing fleet and such 
problems resulted in the retirement of the fleet after 20 
rather than 30 years. Ms. Harrington advises that some of 
the LRVs in the Boeing fleet were sold and some were 
permanently retired. Ms. Harrington adds that any LRVs 
no longer useful to Muni go through the City's process for 
disposal of surplus property. Ms. Harrington adds that 
Muni's has no information that would lead it to believe 
that the Breda LRVs would last less than 30 years. 

With regard to the possibility of replacement of the LRVs 
due to obsolescence, Ms. Harrington advises that although 
parts of Breda LRVs may become obsolete, the LRVs 
themselves will not. Ms. Harrington advises that it is 
standard practice in the industry to rebuild and continue 
to use the LRVs. Ms. Harrington adds that the proposed 
transaction would not prohibit Muni from rebuilding and 
continuing to use the LRVs in the future. 

6. Ms. Harrington advises that the degree of total 
potential risk to the City would vary depending on upon 
the circumstance. She advises that the worst case 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



scenario would be an early termination due to a default by 
Muni. If that occurred, Muni (and thus the City) would be 
liable to pay the termination value, as explained below. 
Ms. Harrington advises that most of the termination 
value would be paid from the monies held in the debt 
payment and equity escrow accounts. Ms. Harrington 
explains that should sufficient funds not be available from 
those sources, the strip surety policies from FSA and/or 
ACE Guaranty Re, Inc. would pay the difference. 
However, those insurers could then seek recourse from 
Muni. With regard to the City's potential financial risks, 
Mr. Robert Bryan of the City Attorney's Office advises 
that based upon the structure of the proposed transaction, 
the City could not be forced to use General Fund monies 
to meet any such obligation. 

As shown in Attachment VI, the termination value could 
be a maximum of approximately $125.7 million in 
December 2014. In December 2003, it would be 
approximately $71.1 million; in December 2024, it would 
be approximately $49.8 million. Attachment VI, provided 
by Muni, shows the scheduled termination values over the 
life of the proposed transaction. 

7. Muni has identified the following financial risks 
associated with the proposed transaction as well as ways 
to mitigate such risks. Attachment IV addresses these 
risks, as well. 

(a) Early Termination Risk - 

This is the risk that the transaction would be 
terminated before the Purchase Option date of 
January 2028. As a result, Muni would be responsible 
for "termination payments" as well as the remaining 
sublease payments (the funds for which would be in 
the escrow accounts). As explained in Attachment IV, 
the most likely reasons for an early termination would 
be a default by Muni, obsolescence of the LRVs, or a 
catastrophic event which destroys the LRVs. 

As stated previously, the source of funds to pay for an 
early termination would be the funds held in escrow, 
assuming such funds have earned sufficient interest to 

Board of Supervisors 

Budget Analyst 

3i 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



cover such payments. If the required termination 
payment exceeds the investment principal plus 
interest earned to date, an insurance polky (Financial 
Security Assurance) would cover the difference. 
However, Ms. Harrington advises that Financial 
Security Assurance would have the right to then seek 
reimbursement from Muni. 

Ms. Harrington advises that the most likely reasons 
for an early termination would be default by the City, 
obsolescence of the Breda vehicles, or destruction of a 
Breda vehicle, or requisition by a third party. Ms. 
Harrington advises that an example of requisition by a 
third party would be the unlikely possibility that some 
other governmental agency (State or Federal) might 
requisition the vehicles due to some type of emergency. 

Proposed Mitigation of Early Termination Risk - 
According to Ms. Harrington, the early termination 
risks are mitigated by the fact that a portion of the 
funds to pay for the remaining sublease payments 
would be held in escrow and invested in low-risk direct 
obligations of the U.S. Government or investment 
securities secured by direct obligations of the U.S. 
government. 

As stated previously, FSA and/or ACE Guaranty Re, 
Inc. Strip Surety Policies would be available if the 
defeased funds were insufficient. FSA and/or Ace 
Guaranty Re, Inc. could then seek reimbursement 
from Muni. 

Further, Muni has obtained third-party insurance on 
the Breda fleet which would provide funds for an early 
termination due to reasons other than an earthquake, 
war, or terrorism. Ms. Harrington advises that Muni 
has committed to obtaining $200 million in insurance 
coverage with a $40 million deductible and may 
purchase additional insurance. Ms. Harrington advises 
that the $40 million value of the deductible amount is 
the estimated value of the 12 LRVs that would be held 
back from the transaction. 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Ms. Harrington advises that the early termination risk 
is further mitigated by the fact that Muni can control 
many of the actions that could trigger a default (and 
thus an early termination), such as failure to properly 
maintain or insure the LRVs, failure to make sublease 
payments which is unlikely because funds held in the 
two escrow accounts are available for this purpose. Ms. 
Harrington notes that to date, none of the more than 
30 similar transactions nationwide involving transit 
agencies have terminated early for any reason. 
Attachment VII, provided by Muni, lists other 
jurisdictions that have conducted leveraged lease- 
leaseback transactions. 

(b) Breach of Contract Risk - This is the risk that the 
Equity Investors would not receive their Federal tax 
benefits related to the proposed transaction as a result 
of an action, or lack of action, by the City as required 
by the proposed transaction agreements. (While such 
actions or non-actions would be carried out by Muni, 
this section refers to "the City" because the City is the 
signatory to the proposed transaction.) Ms. Harrington 
advises that an example of how the City could breach 
the contract would be if the City misrepresents 
information about the Breda LRVs to the Equity 
Investors in the preparation for the transaction. Ms. 
Harrington advises that as long as the City and Muni 
do what they have agreed to do under the transaction's 
documents, such a risk would be minimized. Ms. 
Harrington advises that the Equity Investors would 
bear the risk that Federal tax law may change and 
they would not, as a result, be able to receive the tax 
benefit associated with depreciation of assets. 

Proposed Mitigation of Breach of Contract Risk - 
Muni's Finance section will monitor whether the City 
is complying with such provisions. 

(c) Tax Risk - Mr. McCalley advises that there are four 
components to tax risk, one of which is borne by the 
Equity Investors and three of which are borne by the 
City. Mr. McCalley advises that, as explained above, 
the Equity Investors would bear the risk that Federal 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



tax laws may change and they would no longer be able 
to reap the tax benefits of depreciating the transferred 
assets (the Breda LRVs). According to Mr. McCalley, 
the only circumstance under which the City could be 
held responsible for this would be if the tax benefits 
were lost because the City misrepresented information 
about the Breda vehicles. 

Mr. McCalley advises, though, that the City would be 
responsible for three other tax risks. The proposed 
resolution would indemnify the Equity Investors for 
such risks. These include the risk that Sales Tax, 
Property Tax, or Withholding Tax could be imposed on 
the transaction. Sales tax risk refers to the possibility 
that transfer of LRVs to the Trust would be subject to 
State Sales Tax. Property Tax risk refers to the 
possibility the Assessor would impose Property Taxes 
on the transfer of the LRVs to the Trust. Withholding 
Tax risk refers to the possibility that a change in tax 
law would subject the proposed transaction to 
Withholding Tax, an event that Muni officials believe 
is highly unlikely. 

Proposed Mitigation of Tax Risk - Sales Tax risk is 
mitigated by State legislation approved in October of 
2001 that exempts lease-leaseback transactions 
executed before 2004 from State Sales Tax. Ms. 
Harrington advises that even if the exemption is not 
extended beyond 2004, the proposed transaction would 
not be affected. Property Tax risk is mitigated by a 
commitment Muni has received from the current 
Assessor, stating that she will not impose Property 
Taxes on the transaction. However, as explained in 
Attachment IV, this does not necessarily eliminate the 
risk that future Assessors may take a different 
position. Lastly, Muni believes that a change in 
Federal tax law that would result in making the 
transaction subject to Withholding Taxes is unlikely 
because such a change would, in effect, be retroactive 
and would adversely impact trillions of dollars of such 
transactions. 



Board of Supervisors 

Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



(d) Risk of Bankruptcy of either Trust or of Equity 
Investors - According to Mr. McCalley, this is the risk 
that the Equity Investors go bankrupt and the 
bankruptcy judge determines that the escrow accounts, 
holding the funds for the sublease payments, are part 
of bankruptcy assets. 

Proposed Mitigation of Risk of Bankruptcy of Trust or 
Equity Investors - Mr. McCalley advises that this risk is 
mitigated by the use of a Special Purpose Trust (the 
"Trust") that is "bankruptcy-remote." He advises that 
bankruptcy attorneys have advised that this means the 
Trust could not be included in the bankruptcy assets. 

(e) Credit Risk - The City's obligations to make the 
sublease payments would be economically defeased on 
the closing date of the transaction through the City's 
deposit in escrow of the loan and equity portions of the 
lump-sum payment paid to the Trust. However, the 
City would still be legally obligated to make the 
sublease payments. The risk, then, is the possibility 
that the sublease payments may not be made. 

Proposed Mitigation of Credit Risk - The risk associated 
with the Debt Payment Undertaker (the loan portion of 
the lump-sum payment) would be mitigated in two 
ways: through insurance provided by an Aaa/AAA rated 
insurer and through the ability to replace the Debt 
Payment Undertaker or the insurer if the insurer's 
credit rating is downgraded. The risk associated with 
the equity investment portion would be mitigated by 
investing in low-risk, fixed-rate securities backed by 
the full faith and credit of the U.S. government. 

(f) Operational Risks - Under the proposed transaction, 
Muni will be responsible for maintaining and repairing 
the Breda LRVs during the term of the sublease. If any 
LRV must be permanently removed from service, Muni 
would be responsible for compensating the Equity 
Investors for the LRV and corresponding loss of tax 
depreciation benefits. 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Proposed Mitigation of Operational Risks - Muni would 
"hold back" 12 vehicles from the proposed transaction, 
for the purpose of substituting one of the 12 if one of 
the vehicles involved in the proposed transaction is 
permanently removed from service. If Muni were 
unable to provide a "holdback" vehicle as a 
replacement, insurance proceeds would compensate the 
Equity Investors instead. Ms. Harrington notes that 
Muni staff are aware of only one instance in the last 25 
years when a Muni light rail vehicle was destroyed due 
to an accident. 

8. Ms. Harrington advises that the Equity Investors, as 
well as the loan and guaranty surety providers, were 
selected through a competitive bid process. She advises 
that the firms offering the highest economic return to 
Muni were selected as the Equity Investors. Ms. 
Harrington further advises that the loan and guaranty 
surety providers were selected based on the lowest bid. An 
explanation of the bid process and a summary of the bids 
received is included in Attachment VIII, provided by 
Muni. Ms. Harrington advises that the group of investors 
consisting of CIBC Capital Corporation, Comerica 
Leasing Corporation, Wells Fargo Bank Minnesota, N.A. 
Australia and New Zealand Banking Group Limited 
submitted a bid that would provide the highest economic 
return to Muni, resulting in an estimated $33 million one- 
time revenue gain for Muni. Ms. Harrington advises that 
bids were submitted based on the percentage of vehicle 
market value that the Equity Investors would pay Muni, 
as described in Attachment VIII. Ms. Harrington notes 
that the economic benefit data included in Attachment 
VIII was based on the May 2000 estimate of the number 
of LRVs included in the proposed transaction. That 
number has since increased and therefore, the current 
estimate of the net economic benefit is higher than that 
shown in Attachment VEIL The next highest bid was 
submitted by Fleet Bank. 

Ms. Harrington notes that since 1995, CIBC has been 
involved in more than 30 transactions similar to the 
proposed transaction and valued at more than $5 billion 
involving U.S. transit agencies. Ms. Harrington further 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



advises that Wells Fargo and Comerica, also have 
experience as Equity Investors in leveraged lease- 
leasebacks. Specifically, Ms. Harrington advises that 
Wells Fargo is an Equity Investor in such transactions 
with Los Angeles County MTA and Caltrans, as well as in 
Seattle. Ms. Harrington advises that Comerica is an 
Equity Investor in Los Angeles County MTA as well as 
with other transit agencies in Dallas and Seattle. Ms. 
Harrington also advises that FSA has served as surety 
provider for 30 such transaction and as Lender in more 
than 10 such transactions. 

9. Assistant City Risk Manager Nancy Johnston-Bellard 
advises that she has reviewed all documents related to 
the proposed transaction. Based upon this review, she 
advises that she believes the City's risk related to the 
proposed transaction is well-managed. Ms. Johnston- 
Bellard advises that "well managed" means the City has 
taken appropriate action prior to entering into the 
proposed transaction to mitigate the risk that the City- 
could be held responsible for the liability of one of the 
other parties and thus is responsible only for its own 
actions. 

10. Ms. Harrington advises that Muni anticipates 
carrying out another leveraged lease-leaseback 
transaction that would close by the end of the first 
quarter of calendar year 2003. Ms. Harrington advises 
that transaction would involve an additional 21 LRVs in 
the Muni Breda LRV fleet. Muni estimates that such a 
future transaction would result in $5.9 million in one-time 
revenue to Muni, based on the assumptions surrounding 
the proposed current transaction. Such a subsequent 
transaction would also require Board of Supervisors 
approval at that time. 

11. The proposed resolution would approve the key 
agreements related to the transaction (Participation 
Agreements, Head Lease Agreements, Head Lease 
Supplements, Sublease Agreements, Sublease 
Supplements, Payment Agreements, Equity Collateral 
Security Agreement, Custody Agreement, Support and 
Access Agreements, Agreements for Assignment on 

Board of Supervisors 

Budget Analyst 
39 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Default, Tax Indemnification Agreements, Insurance and 
Indemnity Agreements) in "substantially the form 
presented to the Board." With regard to each of these 
documents, however, the proposed resolution further 
authorizes the Mayor or his designee, who, according to 
Ms. Harrington, would be the Director of the Municipal 
Transportation Agency (MTA) who is the same person as 
the General Manager of Muni, to execute such 
agreements and "make such modifications, changes, or 
additions to said documents as may be necessary or 
advisable provided that such modification, change, or 
addition does not extend the term of the sublease beyond 
thirty (30) years or provide for a net present value benefit 
to the City of less than 6% of the appraised value of the 
Rail Cars." Ms. Michelle Sexton of the City Attorney's 
Office advises that such language is similar to language 
typically included in legislation to approve bond 
issuances. 

However, the Budget Analyst notes that the subject 
transaction is more complex, less routine, and exposes the 
City to more risk than a bond issuance. Therefore, the 
Budget Analyst recommends that such language be 
amended to further state that such changes, additions or 
modifications made by the Mayor or the Mayor's designee 
should not substantially alter the agreements as approved 
by the Board of Supervisors and that any substantive 
changes would require Board of Supervisors approval. 

The proposed resolution also authorizes and directs "the 

proper officers of the City to do any and all things and 

take any and all actions and execute any and all 
certificates, agreements and other documents, including 
but not limited to those documents described in the 
Transaction Summary or the sublease and other 
documents herein approved...." The Budget Analyst 
recommends amending such language to state that such 
actions should not substantially alter the substance of the 
transaction as approved by the Board of Supervisors. 

12. The proposed resolution states that the City "will 
waive its right to a jury trial in any suit, action, or 
proceeding arising as a result of a breach by the City of a 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



monetary obligation under any of the documents to which 
the City is a party and the Transaction." Ms. Sexton, of 
the City Attorney's Office, states that it is highly unusual 
for the City to waive its right to a jury trial. She notes, 
however, that such a waiver in this instance is limited 
solely to a "breach by the City of a monetary obligation 
under any of the documents to which the City is a party 
under the Transactions." She advises that Muni requested 
that such language be included in the proposed resolution 
because no other similar transactions (in other 
governmental jurisdictions) have been approved without 
such language. She advises that the concern of the Equity 
Investors is that the proposed transaction is too 
complicated for review by a jury. She further advises that 
the most likely breach by the City that would be governed 
by this provision would be the City's failure to make the 
required sublease payments to the Trust. However, she 
notes that it is highly unlikely the City would fail to make 
such payments because the City's obligation will have 
been economically defeased and thus funds held in escrow 
would be available for the regularly scheduled payments. 

13. The proposed resolution includes a provision to waive 
the requirements of Sections 12B and 12C, the non- 
discrimination provisions of the San Francisco 
Administrative Code for any agreement authorized by the 
proposed resolution to which the City and any of the 
following are parties: (a) Lender (b) Strip Surety Provider 
(c) Equity Investor and (d) Debt Payment Undertaker (see 
Attachment III). Ms. Harrington advises that such 
waivers are necessary because the Equity Investors CIBC, 
Comerica, and ANZ are not in compliance with such 
nondiscrimination provisions. In addition, Strip Surety 
Policy Providers ACE Guaranty Re, Inc. and FSA are also 
not in compliance. Nor are Debt Payment Undertaker 
Premier International Funding Co. or the Lender FSA 
Global Funding Limited in compliance. Ms. Harrington 
advises that Wells Fargo and State Street Bank are in 
compliance with Section 12B. 

14. Ms. Harrington advises that MTA Board of Directors 
approved the proposed transaction on November 20, 2001 
through Resolution No. 01-115. Ms. Harrington advises 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



the Federal Transit Administration (FTA) approved the 
proposed transaction in January of 2002. Ms. Harrington 
advises that FTA approval is required because the light 
rail vehicles involved in the transaction were funded 
through a combination of FTA grants, State rail bond 
funds, and Proposition B capital grant funds. Ms. 
Harrington further advises, as stated on page 7 in 
Attachment IV, that the "FTA strongly supports the 
efforts of transit agencies to undertake 'innovative 
financing' initiatives" such as the proposed transaction. 
Attachment IX, provided by Muni, includes two letters 
from the FTA in support of the proposed transaction. 

15. Ms. Harrington notes that Muni has the option to 
purchase the 118 LRVs at the end of the sublease term 
(purchase option) in approximately 27 years for 
$1,015,275,352. Ms. Harrington explains that at the start 
of the transaction, Muni would be defeasing the future 
sublease payments and the purchase option amounts by 
placing the $355.1 million into escrow. Ms. Harrington 
advises that the purchase option includes final loan 
payments on the loan portion as well as equity 
investment repayment, with interest over 27 years. Ms. 
Harrington advises that the funds placed in escrow will 
grow to the amount required to defease these obligations. 
Ms. Harrington advises that the purchase option will be 
automatically exercised unless Muni acts to choose not to 
exercise it. 

16. Due to the uncertainty regarding the specific amount 
of the one-time revenue Muni will collect (currently 
estimated at $33 million) as a result of the proposed 
leveraged lease-leaseback (because of the potential for 
fluctuations in interest rates), and the complex nature of 
the transaction, the Budget Analyst recommends that the 
Board of Supervisors amend the proposed resolution to 
require Muni to report back to the Board of Supervisors 
after Muni has completed the proposed transaction. Such 
a report should include: (a) specific information on the 
actual amount of the one-time revenue received and how 
Muni plans to use such revenue and (b) information on 
any changes in the transaction since its approval by the 
Board of Supervisors. 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



17. Attachment VII, provided by Muni, lists other 
jurisdictions that have completed leveraged lease- 
leaseback transactions similar to the one proposed by 
Muni. Ms. Harrington notes that such California 
jurisdictions include: (a) the Southern California Regional 
Rail Authority (b) the Peninsula Corridor Joint Powers 
Board (c) Bay Area Rapid Transit (BART) (d) Los Angeles 
County Metropolitan Transit Authority and (e) State of 
California Caltrans among others as shown in 
Attachment VIL Ms. Harrington advises that Muni is not 
aware of any instance to date in which any such public 
transit agencies suffered an economic loss as a result of 
such a lease-leaseback transaction. 

18. Ms. Harrington advises that expenses related to the 
proposed transaction to be paid by Muni are estimated to 
be $9,939,914 (the $33 million one-time revenue gain to 
Muni is net of transaction expenses of $9,939,914) and 
would include the costs of a surety guaranty premium, 
legal counsel for all parties, lender's fees, financial 
advisory services, appraisal fees and trustee costs. 

19. Attachment II, provided by Muni, shows that Muni 
would have to pay to various legal firms, City 
departments, and other parties a projected $1,670,000 in 
"broken deal expenses" if the subject resolution is not 
approved by the Board of Supervisors and/or the Mayor. 
These expenses consist primarily of legal costs incurred 
by the various parties to the transaction including Muni. 
Ms. Harrington advises that it is a standard industry 
practice in this type of transaction for the transit agency 
to pay such legal costs on behalf of the other parties to the 
transaction. 

20. In the professional judgment of the Budget Analyst, 
this "broken deal expense" provision is highly unusual 
and is not in the best interests of the City. In this 
situation, Muni is effectively advising the Board of 
Supervisors that if the Board of Supervisors does not 
approve the subject proposed resolution, Muni (see 
Attachment IV, page 11) will have to pay $1,670,000 in 
broken deal expenses, including $955,000 incurred by the 

Board of Supervisors 
Budget Analyst 
63 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Equity Investors, FSA and the Trustee, as shown in 
Attachment II. The Budget Analyst would never 
recommend that such a provision be included in 
legislation submitted to the Board of Supervisors. Mr. 
Robert Bryan of the City Attorney's Office advises that as 
a legal matter, the MTA Board has the authority to enter 
into contracts to pay the broken deal expenses even if the 
transaction is not approved by the Board of Supervisors. 
Mr. Bryan advises that there are letter agreements signed 
by the MTA that the MTA could formalize in order to pay 
such expenses. However, the point that the Budget 
Analyst makes is that if the Board of Supervisors and the 
Mayor do not approve this proposed resolution, such 
disapprovals automatically require the Muni to pay 
broken deal expenses of $1,670,000. 

Recommendations: 1. In accordance with Comment No. 11, amend the 

proposed resolution as follows: 

(a) on page 14, line 13, at the end of the paragraph, 
insert the following language: " Anv changes, additions 
or modifications by the Mayor or his designee should 
not substantially alter the agreements as approved by 
the Board of Supervisors. If any such changes, 
additions or modifications are substantive, additional 
Board of Supervisors approval is required ." 

(b) on page 14, line 25, at the end of the paragraph, 
insert the following language: "Anv such agreements 
or actions should result in a transaction that is 
substantially the same as that approved by the Board 
of Supervisors. If such agreements or actions result in 
a transaction that differs substantially from that 
approved by the Board of Supervisors, additional 
Board of Supervisors approval is required." 

2. In accordance with Comment No. 16, amend the 
proposed resolution to require Muni to report back to the 
Board of Supervisors after Muni has completed the 
proposed transaction. Such a report should include: (a) 
specific information on the actual amount of the one-time 
revenues received and how Muni used such revenues and 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



(b) information on any changes in the transaction since its 
approval by the Board of Supervisors. 

3. Approval of the proposed resolution, as amended, is a 
policy matter for the Board of Supervisors because: (a) the 
proposed transaction would limit the City's ability to 
retire the leased Breda vehicles until 2028, (b) according 
to Ms. Harrington, Muni proposes to use up to $15.9 
million of the anticipated one-time revenue gain of $33 
million to Muni to fund projected budget shortfalls and 
mandatory expenditure increases rather than to fund one- 
time capital projects (c) the proposed transaction includes 
six risk factors as itemized in Comment No. 7 that could 
expose the City to unknown future costs (d) the proposed 
resolution would waive the City's right to a jury trial (e) 
the proposed resolution would waive the non- 
discrimination requirements of Sections 12B and 12C of 
the City's Administrative Code and (f) the Muni will be 
obligated to pay "broken deal expenses" of $1,670,000 if 
the Board of Supervisors and/or the Mayor disapproves 
this proposed resolution. 



Board of Supervisors 
Budget Analyst 



ATTACHMENT I 



MUNI 

First Tranche 



Estimated Transaction Expenses (02/10/2002) 
Equipment Cost 



Legal Counsels 

Insurance Premiums (Property, Surety) 

Lender/PUA Fees 

Trustee/Custodian 

Advisors/Consultant/ Appraiser 

Miscellaneous 

Total Estimated Expenses: 



5388,156,000 


100.00% 


Projected 


%ofe.c. 


1,235,000 


0.32% 


3,754,588 


0.97% 


875,000 


0.23% 


291,000 


0.07% 


3,664,326 


0.94% 


120,000 


0.03% 


$9,939,914 


2.56% 



46 



ATTACHMENT II 



MUNI 
First Tranche 



ESTIMATED "BROKEN DEAL' 


EXPENSES 




Equipment Cost 


$388,156,000 


100.00% 




Projected 


% ofe.c. 


Expenses Incurred by Equity Investors, FSA, Trustee 


955,000 


0.25% 


Expenses Incurred by Muni: 






External Attorneys 


415,000 


0.11% 


Services of City Departments 


300,000 


0.08% 


Total Estimated Broken Deal Expenses 


1,670,000 


0.43% 



47 



ATTACHMENT III 




Page 1 of 
Municipal Transportation Agency 

City and County of San Francisco 




To: Members of Finance Committee 

Board of Supervisors 

From: Michael T. Burns 

Director 
Municipal Transportation Agency 

Virginia Harrington 

Deputy General Manager, Finance & Administration 

Date: March 12, 2002 

Subject: Proposed Muni Lease-Leaseback Transaction 

The purpose of this memorandum is to provide the Finance Committee with a high level 
description of the San Francisco Municipal Railway's proposed leveraged lease-leaseback 
transaction involving its Breda Light Rail Vehicles (the "Breda Vehicles"). This 
memorandum will supplement the information provided to the Committee by the Budget 

Analyst. 

Brief Description of Transaction 

This transaction does not involve the financing or procurement of any new vehicles. 
Instead, Muni's objectives are to obtain a one-time cash payment in exchange for 
transferring the tax benefits associated with its Breda Vehicles to private parties (known 
as "Equity Investors"), without impairing the day-to-day operations of the transit system, 
and while minimizing the financial risks that are associated with the transaction. So long 
as the City and Muni meet their obligations under the transaction, such as maintaining the 
Vehicles to the industry standards, Muni will maintain "quiet enjoyment" of the Breda 
Vehicles. 

Below are a set of questions and answers concerning the transaction. 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCISCO-CA. 94102-4524 
S(41 5) 554-6896 FAX (415)554-4143 



ATTACHMENT III 



Memorandum to Finance Committee 



Page 2 of 5 



Page 2 



Who Are the Parties in the Transaction? 

Title and Role in Transaction 

Head Lessor & Subleasee 

(Leases Vehicles to Equity Investors' 

Trust, and subleases Vehicles back) 

Head Lessee & Sublessor 

(Leases Vehicles from City, and subleases 

Vehicles back to City) 

Equity Investors 



Lender 

(Makes loan to Equity Investors' 

Trust) 

Debt Payment Undertaker 
(Similar to a paying agent, 
responsible for making payments from an 
escrow account to Lender when due) 

Guarantor of Payment Undertaker 

"Strip" Surety Policy Provider 1 
For CFBC, Comerica and ANZ 

"Strip" Surety Policy Provider 
For Wells Fargo 2 

Trustee/Custodian 



Entity 

City and County of San Francisco 



Single Purpose Trust created by 
Equity Investors ("Equity Investors' 
Trust") 

- CEBC Capital Corporation 

- Comerica Leasing Corporation 

- Wells Fargo Bank, Minnesota N. A. 

- Australia and New Zealand 

Banking Group Limited ("ANZ") 

FSA Global Funding Limited ("FSA") 



Premier International Funding Co. 

Financial Security Assurance ("FSA") 
Financial Security Assurance ("FSA") 

ACE Guaranty Re, Inc. 

State Street Bank & Trust of California 



1 A "Strip Surety Policy" is similar to "gap" insurance coverage, which insures that the Equity Investors will be 
made financially whole in the event that the transaction terminates early and the funds in escrow are insufficient 
make all of the payments that they are owed. 

2 Wells Fargo currently has surety policies in place with FSA for other transactions. In order to not be 
"overexposed" to any individual surety policy provider, they replaced FSA in this transaction with ACE with the 
City's concurrence. 

401 VAN NESS AVENUE-SUITE 334 -SAN F R ANCISCO-CA. 94102-4524 
8(415)554-6896 FAX (415)554-4143 



ATTACHMENT III 

Memorandum to Finance Committee Page 3 

Page 3 of 5 

Please note that the legal documents indicate that the City and County is the obligated 
party in the transaction, rather than Muni, and as a result, the City is referenced often in 
this memorandum. However, we expect the financial risks of the transaction to be borne 
by Muni (recourse is limited to Muni revenues), barring a catastrophic event. The funds 
received from the transaction would be Muni revenues, and therefore the financial risks 
should be construed as risks to Muni. 

What is the Status of the Breda Vehicle Fleet and How Was It Originally Paid For? 

Muni's fleet of Breda Light Rail Vehicles is expected to grow to 151 vehicles by the end 
of calendar year 2002. Delivery of the Breda Vehicles began in 1996, and there are 
currently 130 Breda Vehicles in service. The procurement of the vehicles was funded 
from a combination of Federal Transit Administration (FTA) grants, State rail bond 
funds, and local Proposition B capital grant funds. 

How Does This Transaction Generate Revenue For Muni? 

Muni's economic benefit is derived from the transfer of Federal income tax benefits 
associated with the Breda Vehicles. As a governmental entity, the City and County of 
San Francisco does not pay tax to the Federal Government and, accordingly, cannot avail 
itself of the tax benefits associated with the ownership of depreciable property, such as 
the Breda Vehicles. By contrast, private entities can benefit from depreciating their 
assets for tax purposes - the annual amount of depreciation associated with an asset is 
treated as a current expense that offsets current income, similar to an itemized deduction 
on a personal income tax return. 

In a transit vehicle lease-leaseback transaction, the Equity Investors derive Federal tax 
benefits by recording the depreciation from transit vehicles on their financial statements, 
and from incurring the tax-deductible expenses associated with the loan and transaction 
expenses involved in the financing. In exchange for these benefits, the Equity Investors 
provide a transit agency with an up-front, one-time payment, net of transaction expenses. 



How Much One-Time Revenue is Muni Expecting? 

The financing has been divided into two parts or "tranches," the first of which will 
involve 1 1 8 Breda Vehicles. An additional twelve Vehicles will be held back and made 
available for "substitution" purposes. (See discussion below on Risks - Operational 
Risks). Muni's financial advisors currently estimate that, based on current interest rates, 
Muni will receive a payment of approximately S33.0 million for the first tranche, net of 
all expenses incurred in the financing. This is equivalent to 8.5 percent of the $388.1 
million appraised fair market value of the vehicles included in the first tranche. 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCI SCO-CA. 94102-4524 
B(41 5) 554-6896 FAX (415)554-4143 



50 



ATTACHMENT III 
Memorandum to Finance Committee Page 4 

Page 4 of 5 

The final amount of the payment to Muni may vary significantly between now and when 
the financing closes due to changes in interest rates. Increases in U.S. Treasury and 
related interest rates will increase the net revenue to Muni, while decreases in those 
interest rates will decrease the revenue, because the final calculation of Muni's revenue is 
tied to the interest earnings on fixed-rate investments. 

The current schedule calls for delivery of the final Breda Vehicles by the end of calendar 
year 2002. As a result, the second tranche of up to 21 Vehicles is projected to close no 
sooner than the first quarter of calendar year 2003. Assuming the same level of revenue 
per vehicle as in the first tranche, the one-time revenue from the second tranche is 
estimated at $5.9 million. The second tranche would require approval from both the 
MTA Board of Directors and the Board of Supervisors. 

Where Would the Revenues Go? 

The revenues are deposited in the Municipal Transportation Fund, which was created by 
Proposition E (Charter Article 8A.105). All Muni revenues, including the City's General 
Fund support to Muni, are placed into this Fund and are utilized for operating or capital 
purposes of the Municipal Transportation Agency. 

When Would the Revenue be Legally Recognized? 

Muni's understanding is that the revenue from the first tranche can be recognized once 
the transaction closes, which would be approximately one week after approval by the 
Board of Supervisors and the Mayor. Muni would then submit a supplemental 
appropriation request to the Municipal Transportation Agency Board of Directors and to 
the Board of Supervisors seeking authority to spend some of the proceeds from the 
transaction. 

Have Other Transit Agencies Completed This Type of Transaction? 

Yes. Since the early 1980's, transit agencies have undertaken transactions similar to this 
one, in which they transferred depreciation or other tax benefits to private entities in 
exchange for an up-front cash payment. For example, the City engaged in "sale and 
leaseback" transactions involving Muni's Boeing Light Rail vehicles in 1983 and 1985. 



401 VAN NESS AVENUE-SUITE 334 -SAN F R ANCISCO-CA. 94)02-4524 
ffi(415) 554-6896 FAX (4 15)554-4 143 



51 



ATTACHMENT III 
Memorandum to Finance Committee Page 5 

Page 5 of 5 



As Federal tax regulations and rulings have evolved, and in some cases become more 
stringent, the structure of these transactions has changed. Currently, other transit 
agencies have utilized the same type of financing structure as the one described in this 
memorandum. In 2001 and thus far in 2002, leveraged lease-leaseback transactions have 
been undertaken by Caltrans, BART, the Peninsula Corridor Joint Powers Board, as well 
as transit agencies in Los Angeles, Atlanta, St. Louis, Philadelphia, and Seattle. A 
separate document lists the transit agencies that have completed lease-leaseback deals in 
the country over the past six years. 

Why Didn't Muni Do This Earlier? 

Under previous state law, a lease-leaseback transaction such as this one may have been 
subject to State and Local sales taxes. Prior to October 2001 , only the California 
Department of Transportation had been granted a legislative waiver from state and local 
sales taxes for these transactions. Other California lease-leaseback transactions involved 
transit agencies that were subject to the jurisdiction of the U.S. Surface Transportation 
Board, which exempted them from State and Local sales taxes. That is not the case for 
Muni. Under the lease-leaseback documents, Muni would have been required to absorb 
that cost, and at a State and local sales tax rate of 8.25%, the sales tax would have 
negated the net revenues to Muni. 

On October 7, 2001, Governor Davis signed Assembly Bill 984 ("A.B. 984") into law. 
A.B. 984 provides a sales and use tax exemption for the lease-leaseback of transit 
"qualified equipment" (including vehicles). This exemption "sunsets" on January 1, 
2004. The Bill requires the State Legislative Analyst to conduct a study of the exemption 
and to submit a report to the Legislature by January 1, 2003. The results of this study 
will influence whether this exemption may be renewed. 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCISCO-CA. 94102-4S24 
S(41 5) 554-6896 FAX (4 15)554-4 143 



52 




Municipal Transportation A^etfc^ ^ 
City and County of San Francisco 



ATTACHMENT IV 



of 14 




To: Members of the Finance Committee 

Board of Supervisors 

From: Michael T. Bums 

Director 
Municipal Transportation Agency 

Virginia Harrington 

Deputy General Manager, Finance & Administration 

Date: March 20, 2002 

Subject: Questions and Answers on the Structure of the Muni Lease-Leaseback 
Transaction 

The purpose of this memorandum is to provide the Committee with a high level 
description of the structure of the San Francisco Municipal Railway's proposed leveraged 
lease-leaseback transaction involving its Breda Light Rail Vehicles (the "Breda 
Vehicles"). The memorandum also addresses the issue of the financial risks to the City in 
this transaction, and the steps that have been taken to mitigate those risks. 

This memorandum will supplement the information provided to the Committee by Muni 
in a separate memorandum regarding a general overview of the transaction, and in 
another memorandum on the proposed uses of the revenue from this transaction. 

How Does This Financing Work? 

The mechanism for transferring depreciation and other tax-related benefits from the City 
to the Equity Investors is a lease. A "Head Lease" and a "Sublease" are executed 
simultaneously on the day that the financing closes. Accordingly, these types of 
transactions are called "lease-leaseback financings." A diagram of the major agreements 
and parties involved in the transaction is included as Attachment A. 

Who Are the Primary Parties to the Head Lease and Sublease? 

The City and Single Purpose Trusts ("Equity Investors' Trusts") formed by the Equity 
Investors. Each Equity Investor will form its own Equity Investor Trust, all of which arc 
identical. Two of the Equity Investors, CIBC and Comerica, will each form two Equity 
Investor Trusts, so the total number of Equity Investor Trusts involved in the transaction 
is six (but for the sake of simplicity, this memorandum will continue to refer to a single 
Equity Investor Trust). That is because CIBC and Comerica are leasing Vehicles with 



53 



ATTACHMENT IV 
Municipal Transportation Agency 

City and County of San Francisco p age 2 of 14 



different remaining useful lives and different purchase option dates (an older Vehicle has 
a shorter remaining useful life and an earlier purchase option date). CIBC is leasing 
Vehicles with 54 and 50-year useful lives, and Comerica is leasing Vehicles with 52 and 
51 year useful lives. 

What is the Purpose of the Head Lease? 

The Head Lease is the document under which City will transfer "tax ownership" of the 
Breda Vehicles to the Equity Investors, so that they can record the depreciation and other 
tax (interest and transaction expenses) benefits associated with the Breda Vehicles on 
their financial statements. The Head Lease is also the agreement under which the Equity 
Investors, through the Equity Investors' Trust, are obligated to pay rent for their "use" of 
the Vehicles. 

What is the Value of the Vehicles Involved? 

The 118 vehicles involved in the first tranche have an appraised value of $388.1 million 
or almost $3.3 million per vehicle on average, based on an independent appraisal 
conducted in connection with this transaction. 

How does the Head Lease Work? What Payments Are Made Under the Head Lease? 

The City will lease the Breda Vehicles to the Equity Investors' Trust for a term of up to 
69 years for the newest Vehicles. The term of the Head Lease is based on U.S. Internal 
Revenue Service regulations, which require the Head Lease term to be equal to at least 
125% of the useful life of the Vehicles. According to an appraisal, the useful life of the 
newest Vehicles is 55 years. In contrast, as also required by IRS regulations, the total 
Sublease term (discussed below) is set at 80 % of the useful life of the Breda Vehicles, so 
the Sublease term is significantly shorter than the term of the Head Lease. 

The Equity Investors' Trust will prepay all of the rent ~ that is, the Equity Investors' 
Trust makes all payments that it will owe to the City throughout the life of the Head 
Lease on the day of the closing. 

How is the Equity Investors' Trust Funded? 

The prepayment of the Head Lease rents will be funded by a loan from a private lender 
(FSA) of approximately $285.5 million to the Equity Investors' Trust equal to 73.6% of 
the fair market value of the Breda Vehicles and an equity investment made by the Equity 
Investors in the amount of approximately $102.6 million or 26.4% of the fair market 
value of the Breda Vehicles. For the first tranche of Breda Vehicles, the total Head Lease 
payment is $388.1 million - which corresponds to the appraised value of the 118 Breda 
Vehicles. 

Does the Full $ 388.1 Million Go to a Muni Account with the City Treasurer? 



54 



Municipal Transportation Agency 



ATTACHMENT IV 



City and County of San Francisco Page 3 of 1^ 



No. The bulk of these funds are placed in two escrow accounts on the day that the 
transaction closes. An amount equal to that portion of the Head Lease payment funded 
by a loan will be placed in one account pursuant to the Payment Agreement among the 
Debt Payment Undertaker, the City and the Equity Investors' Trust. An amount equal to 
that portion of the Head Lease payment funded by the equity investment, less the upfront 
benefit to Muni and transaction expenses, will be invested in obligation backed by the full 
faith and credit of the United States (the "Equity Securities"), and held by the Custodian, 
State Street Bank. These deposits will be disbursed as Muni's sublease rent and purchase 
option payments (discussed in next sections) come due. 

Muni's net revenue from the transaction, after expenses, will be sent to the City 
Treasurer. That amount is estimated at $33.0 million, based upon current interest rates. 

What is the Purpose of the Sublease? 

The Sublease provides Muni the right to continue operating the Breda Vehicles even after 
they have been leased to the Equity Investors' Trust by leasing them back to the City. 

When Will the Sublease Expire? 

Under the terms of the Sublease, the City will have a Purchase Option in approximately 
25 to 27 years, which represents the "base term** of the sublease. As required by ERS 
regulations, the total Sublease term is set at 80 % of the useful life of the Breda Vehicles, 
including a "renewal term" that adds the additional years to get to the 80% of the 55-year 
useful life. As noted above, by IRS regulation, the Sublease Term is significantly shorter 
than the Head Lease Term. However, once the Purchase Option is exercised, the 
Sublease and Head Lease will terminate. 

The payment of that Purchase Option may be made in four quarterly installments. The 
Sublease has been written so that the City will not be required to take any action at the 
expiration of the Sublease term in order to exercise the Purchase Option. The City would 
be required to take action only if it chose not to exercise the Purchase Option. 

What Payments Are Made Under the Sublease 

Under the Sublease, the City will be making periodic rent payments to the Equity 
Investors' Trust as Sublessor. Those payments, in turn, will repay the loan used to 
finance the loan portion of the Head Lease and to fund payments to the Equity Investors 
for providing the equity portion of the Head Lease payment. In effect, the source of the 
Sublease payments will be the loan and the equity escrows previously described. Interest 
earnings are retained in the escrow accounts to meet all rent and purchase option 
payments obligations during the Sublease term. 

Will the City Need to Fund Sublease Payments From Its Annual Budgets? 



SS 



Municipal Transportation Agency 



ATTACHMENT IV 



City and County of San Francisco Page 4 of 14 



No. The City's scheduled rent payment obligations throughout the life of the Sublease 
are "economically defeased" on the day of the closing because the funds deposited in the 
escrow accounts, combined with investment income earned on those funds, are designed 
to be sufficient to make all scheduled Sublease rent payments, including the Purchase 
Option payment. However, because the Sublease payments are not "legally defeased", 
the City will retain the legal obligations associated with the Sublease payments to the 
extent permitted by law. (See "Financial Risks and Risk Mitigation" for further 
discussion). 

How do the Head Lease and Sublease Payments Combine To Yield Net Revenue to 
Muni? 

A highly simplified description of the cash flows in this transaction is shown below 
(assuming current interest rates): 

o The Equity Investors' Trust Pays the City $388.1 million on date of 
closing under the Head Lease; 

o The City uses approximately $355.1 million on the date of closing to fund 
all required Sublease payments, including the Purchase Option payments, 
and transaction expenses; and 

o Muni Receives one-time Revenue net of expenses of approximately $33.0 
million on the day of closing. 

As noted earlier, the estimate of Muni's one-time revenues is highly sensitive to changes 
in interest rates between now and the date that the transaction closes. 

What are Muni's Maintenance and Insurance Obligations? 

Under the Sublease, Muni will be required to operate and maintain the Breda Vehicles to 
the same standards that it uses today. No obstacles to sound maintenance practices are 
created in the Sublease, and no additional requirements are imposed on Muni. 

In connection with this transaction, Muni has committed to purchasing property insurance 
coverage for the Breda fleet. Muni may carry a deductible of up to $40 million (the 
approximate value of the 12 Vehicles held back from the transaction), and would obtain 
coverage up to $200 million. Earthquake damage, and war/terrorism damage is excluded 
from the coverage. This level of coverage will need to be maintained throughout the 27- 
year life of the transaction. Even in the absence of this transaction, it makes sense to 
insure the Breda Vehicle fleet from a business perspective. Muni currently insures a 
limited number of other types of vehicles and a limited number of its facilities. 

What Agreements Will the City and Muni Enter Into? 

56 



ATTACHMENT IV 
Municipal Transportation Agency 

City and Count}' of San Francisco Pa § e 5 of 1Z * 



Attachment B lists all of the Agreements that will be executed at the closing of the 
transaction to which the City is a party. There will be six separate sets of these 
agreements. Please note that even though there are four Equity Investors, there are six 
separate Equity Investor Trusts that will be created. That is because CIBC and Comerica 
are leasing Vehicles with different remaining useful lives and different purchase option 
dates (Vehicles received earlier have a shorter remaining useful life and an earlier 
purchase option date). 

What Has Been the Approval Process to Date? 

The table below summarizes the MTA approval process. 



57 



ATTACHMENT IV 
Municipal Transportation Agency 

City and County of San Francisco Page 6 of 14 



Date 


Step in Process 


4/17/2001 


MTA Board authorizes soliciting bids for leveraged lease 
financing 


5/11/2001 


Bids received from following potential investors: 

* CIBC World Markets and its equity investors 

* Fleet Capital 

* 1" Union/Wells Fargo 




* Bank of America Leasing 


6/5/2001 


MTA Board awards equity investor role to CIBC World 
Markets team, which bid the highest economic return to 
Muni 


6/20/2001 


Final Bids received from the following loan, payment 
undertakers and strip surety policy providers: 




*AIG 




*AMBAC 




* Financial Security Assurance-Dexia Local 
Credit 


8/21/2001 


MTA Board awards loan-related roles to FSA-Dexia, 
which provided the lowest bid 


11/20/2001 


MTA Board approves Leases and other Agreements, and 
authorize Director to select investment instruments 



53 



Municipal Transportation Agency 
City and County of San Francisco 



ATTACHMENT IV 



Page 7 of 14 



Does the Federal Transit Administration Approve of These Transactions? 

In addition to the approvals required from the MTA Board of Directors and the City's 
Board of Supervisors, the approval of the Federal Transit Administration ("FT A") is 
required prior to closing this transaction because the transaction involves vehicles funded 
in part with FTA grants. This approval was received in February 2002. FTA strongly 
supports the efforts of transit agencies to undertake "innovative financing" initiatives 
such as lease-leasebacks, and regularly has approved many of these transactions in the 
past involving other U.S. transit agencies. 

Are There Financial Risks In This Transaction? 

Yes, there are financial risks to the City and Muni in entering into this transaction. The 
goal in structuring the transaction is to minimize those risks. In summary, we are 
confident that the risks identified below are within Muni's control, and are manageable. 

Describe These Financial Risks and How They Are Mitigated? 

Tax Risk 

In general, the Equity Investors bear the Federal tax risk that the lease-leaseback 
transaction is properly structured to meet IRS requirements. If Federal tax law changes, 
or tax rates change, as a result of which the Equity Investors do not receive the level of 
tax benefits that were initially contemplated, the City will bear no responsibility - unless 
such loss of tax benefits was caused by a factual misrepresentation by the City about the 
Breda Vehicles. The tax risk borne by the Equity Investors is the largest risk associated 
with the transaction. 

The City, however, will bear all other tax risks associated with the transaction and will 
need to indemnify the Equity Investors for such risks. The basic risks relate to: (1) sales 
tax, (2) property tax and (3) withholding tax. 

The sales tax risk is that the transfer of the Breda Vehicles to the Equity Investors' Trust 
will be subject to State sales tax, thereby negating the benefit. The adoption of A.B. 984 
addressed this risk and now specifically exempts lease-leaseback transactions executed 
before 2004 from sales tax. 

The property tax risk is that the City Assessor imposes a property tax on the Breda 
Vehicles as a result of the transfer to the Equity Investors' Trust. The City has received 
confirmation from the Assessor that she does not intend to impose a property tax on the 
Breda Vehicles. Assessors throughout the State also have proved such advice. However, 
it should be noted that the Assessor's current posture with respect to property tax does not 
legally bind future assessors who may at a later date determine that a property tax should 
be levied - although the precedent established by the Assessor, and other Assessor's 
throughout the State should greatly minimize this risk. 



59 



ATTACHMENT IV 



Municipal Transportation Agency 

City and County of San Francisco Pa § e 8 of 1* 



Finally, the City bears the risk that the payments made under the Payment Agreement (to 
fund a portion of the Sublease payments) become subject to withholding tax. Under 
current Federal tax law, there is no withholding tax applicable to such payments. This 
risk would arise if there were a change in Federal tax law. Such a change in Federal tax 
law is extremely unlikely as such a change in law would, in effect, be retroactive and it 
would adversely impact trillions of dollars of transactions. 

Credit Risk Associated with Payment Undertaker and Equity Investment 

As noted previously, although its obligations under the Sublease are economically 
defeased through the escrows established with respect to the loan and equity deposits, the 
City remains legally obligated for all payments under the Sublease. As a result, the City 
bears the risk that the payments originating from Payment Undertaker and the Equity 
Securities will, in fact, be made. 

The risk associated with the Payment Undertaker will be mitigated in two ways. First, the 
Payment Undertaker's obligations under the Payment Agreement will be guaranteed by 
the Financial Security Assurance ("FSA"), a "Aaa/AAA"- rated municipal bond insurer 
that has insured several of the City's bond obligations. Second, the City will have the 
ability to replace the Payment Undertaker or FSA, if FSA's credit ratings were to be 
downgraded. Muni's Finance section will monitor FSA's rating on an ongoing basis. 

The risks associated with the Equity Securities will be mitigated by using U.S. 
government securities backed by the full faith and credit of the United States (i.e. 
securities issued by U.S. government agencies). 

Bankruptcy of Equity Investors' Trust or Equity Investors 

This is the risk that the Equity Investors' Trust or the Equity Investors would enter into 
bankruptcy and a bankruptcy judge deems the escrows as part of the bankruptcy estate. 
This risk is mitigated through the use of a Special Purpose Trust that is bankruptcy- 
remote and whose only business is to participate in this transaction 

Operational Risks 

As in its usual operations, Muni will continue to bear the risk of operating the Breda 
Vehicles. Specifically, the transaction would require Muni meet, but not be limited to, 
the following: 

• The need to maintain the equipment and make all necessary repairs and 
improvements in order to maintain the value and utility of the equipment. 

• The need to be in compliance with all applicable state, local, or federal laws and 
regulations related to the operation and maintenance of the equipment. 



60 



ATTACHMENT IV 

Municipal Transportation Agency p a n- e 9 f u 
City and County of San Francisco 



• The need to indemnify various parties to the transaction from liability claims 
arising out of the operation of the equipment. 

The need to maintain clear, unencumbered title to the equipment, with the 
exception of permitted liens. 

• The need to maintain third party property insurance coverage for the equipment. 

Most of the above conditions are within the normal operations of Muni, and are within 
Muni's control. However, failure to meet any of the above requirements or to address 
any deficiencies within the prescribed timelines could result in an Event of Default under 
the sublease, which would trigger payment of Stipulated Loss Value. 

Additionally, Muni would bear the operational risk of incurring physical damage to a 
Breda Vehicle. If the Breda Vehicle can be repaired, Muni will bear that cost. However, 
if the Vehicle must be permanently removed from service, then the Equity Investor must 
be compensated for both the value of the vehicle and the lost tax benefits associated with 
it. 

In the event that a Breda Vehicle is permanently taken out of sendee, Muni has agreed to 
hold 12 Vehicles out of this transaction, and would make one available to substitute for 
the original Vehicle. In the event that those 12 Vehicles already have been used for 
substitution purposes, the Equity Investors would be repaid from funds held in escrow, 
any insurance proceeds and from a Surety Policy that Muni will obtain from FS A. Then, 
similar to other lease-leaseback transactions with transit agencies, the City would be 
required to repay FSA for whatever amounts it pays out under the Surely Policy. 

In order to address the City's repayment obligation to FSA, FSA has agreed to limit its 
recourse to Muni's fare revenues, advertising revenues, rental income, and any other 
Muni revenue sources available for repayment, 10 the extent such other funds are 
available and legally permitted for such purposes. 

It should be noted that there has been no instance in which a Breda Vehicle has been 
destroyed as a result of an accident, and staff has identified only one instance where one 
of Muni's earlier Light Rail Vehicles, a Boeing LRV's, was destroyed due to an accident. 

Early Termination Risk 

In the event that the transaction is terminated prior to the Purchase Option date, the City 
would owe a termination payment. Much of this termination payment will be funded 
from monies held in the debt payment and equity deposit escrow accounts. However, the 
remaining portion will likely exceed Muni's upfront economic benefit for much of the 
Sublease term. Assuming the entire transaction terminates early, the financial obligation 
would range from approximately S71 million in 2003, to a maximum of approximately 
$126 million in 2014, back down to approximately S50 million in 2024, and 
approximately $2 million in 2027. This portion of the City's termination exposure is 
known as its "Stipulated Loss Exposure." While FSA insures that this Stipulated Loss 

61 



ATTACHMENT IV 
Municipal Transportation Agency 

City and County of San Francisco Pa ? e 10 of U 



Exposure will be paid to the Equity Investors, the City is responsible for repaying the 
Strip Surety Policy Provider (FSA). 

A corollary risk associated with early termination is "marked to market" risk. As noted 
previously, to fund the required portion from the Equity Securities, the City would need 
to sell all or a portion of such Securities held in the equity-related escrow account. If 
interest rates were higher on the early termination date than on the closing date of the 
transaction, then the proceeds generated by the sale of the securities could be less than the 
accreted value. Thus, the City could lose a portion of the investment. In other words, the 
City will be assuming "marked to market" risk. As a practical matter, the City always 
assumes this risk with its investments. [Current accounting standards now require the 
City - for all of its investments - to reflect changes in the market value of its 
investments]. 

The most likely reasons for an early termination of the Sublease - most of which are 
within the City's control - would be: 

o Default - For example, if the City fails to abide by the covenants governing the 
operation and maintenance of the vehicles or to maintain third party property 
insurance, and does not remedy those problems within an agreed upon period, this 
would be considered to be an "event of default" and could trigger the termination 
of the leases. Other events of default include: (1) non-payment of Sublease rent 
(which, as a practical matter, could only be caused by a failure of the debt 
payment undertaker and the equity investment - see "Credit Risk Associated with 
the Payment Undertaker and the Equity Investment") and (2) bankruptcy of the 
City. 

o Obsolescence - If Mum determined that one or more Breda Vehicles were 

technologically or economically obsolete, it would be permitted and terminate the 
transaction with respect to that Vehicle(s). However, in the unlikely event that 
Muni no longer has a need for the Breda Vehicles during the Sublease term, for 
any reason, the City will be permitted to sub-sublease the Breda Vehicles to 
another transit system operator in the United States. 

o Casualty - as noted above, destruction of a Vehicle or its requisition by a third 
party could result in an early termination of the sublease with respect to that piece 
of equipment, if no substitute Vehicle were available. There has been no instance 
in which a Breda Vehicle has been destroyed as a result of an accident, and staff 
has identified only one instance where a Boeing LRV was destroyed due to an 
accident. 

With the exception of a casualty loss due to natural events, the majority of events that 
could trigger an early termination are within Muni's control and discretion or, in the case 
of the failure of the Payment Undertaker, are mitigated by downgrade and removal 
protections. In the event of a major catastrophe that resulted in a loss of all or a 

62 






ATTACHMENT IV 

Municipal Transportation Agency p n of . 
City and County of San Francisco 



significant number of vehicles, Muni would look to (1 ) property insurance proceeds 
(excluding an event due to earthquake or terrorism), and (2) funds held in escrow to meet 
its obligation. Other events that could trigger an early termination have been carefully 
reviewed, and we have determined that Muni has sufficient direct control as to minimize 
such risks. Similarly, other transit agencies that have entered into these types of 
transactions have evaluated these risks and have come to similar conclusions. To date, 
none of the over 50 plus transactions involving public transit agencies have terminated 
early for any reason. 

Breach of Contract 

This is the risk that the Equity Investors do not realize their tax benefits as a result of 
actions, or failure to act, by the City, as required by the transaction documents. Muni's 
Finance section will take the lead in monitoring the City's compliance with the 
transaction's requirements. 

Broken Deal Transaction Costs 

If the transaction does not close due to the lack of local approval, Muni will be liable for 
the legal fees, appraisal fees and certain other costs incurred in the preparation of the 
transaction. These "broken deal" costs are currently estimated at approximately $1.6 to 
$1 .7 million, and would be paid from Muni's Operating Budget. Of that amount, 
$240,000 is for a transportation consulting firm (Mercer), $125,000 is for the Vehicle 
Appraiser (American Appraisal) and the remainder is for the attorneys representing the 
parties to the transaction. 

Who are the Outside Advisors used on this Transaction? 

The following financial advisors have assisted with this transaction and will be 
compensated from the proceeds of the transaction: LIATI Group, LLC; Global Capital 
Finance LLC; McCalley Consulting; and Ross Financial. The following firms have 
provided legal advice in connection with this financing: Orrick, Herrington & Sutcliffe 
LLP; Sidley Austin Brown & Wood LLP; and Lofton & Jennings. LIATI Group, 
McCalley Consulting and Lofton & Jennings are Minority Business Enterprises. Ross 
Financial is a Local Business Enterprise. 

How Are the Outside Advisors and Other Parties Being Paid? 

If the transaction closes, the transaction expense? are estimated to be approximately $10 
million, including the cost of the strip surety guaranty premium, lender's fees, legal 
counsel for all parties, financial advisory services, appraisal fees and trustee costs. These 
costs will be paid from the gross revenues of the transaction. The $33. million revenue 
estimate for Muni is net of the transaction expenses. 



63 



Municipal Transportation Agency 
City and Count}' of San Francisco 



ATTACHMENT IV 
Page 12 of 14 



Attachment A 

Leveraged Lease-Leaseback Financing Diagram 
First Tranche of S3S8.1 Million 



Est. Up-front 

Net Benefit 

to Muni 

$33. OM 



Head I.c-m 
(Muni) 



Head Lease | \",recmcnt 



CIBC, Comerica, Wells 
Fargo, ANZ - Equity 
Investors 



Equity Repayment 
Escrow 




Head Lev. 

(Trust treaie 

investor* 


eel 

I by 




Loan 




; S2S5.5 1 


/ A. 







Sublease Agreement 



S69.6 



Custodian 
Agreement 



Subk-s 
(.Mi 



Lender 
(FSA Global Funding) 



S285.5 



Debt Payment 
Undertaking 
Agreement 



Loan Repayment 
Escrow 
(Premier) 



Note: The amount of the Equity Contribution to the Head Lease ($102. 6M) differs 
from the amount deposited in the Equity Repayment Escrow ($69. 6M) by the 
amount that Muni receives as its up-front, one-time revenue from the transaction 
(S33.0M). 



64 



Municipal Transportation Agency 
City and Count)' of San Francisco 



ATTACHMENT IV 
Page 13 of 14 



Attachment B 

Agreements in Leveraged Lease-Leaseback Financing 
To which the Cit\ is a Partv 



Participation Agreement- Spells out the overall terms and conditions, roles, covenants, 
general representations and warranties of the lease-to-service contract transaction relating 
to the Breda Vehicles. Agreement is among the City, the Equity Investors, the trustee 
(State Street), the lender (FSA) and the loan payment undertaker (Premier). 

Head Lease Agreement- Establishes the terms and conditions under which the Breda 
Vehicles will be leased to the Equity Investors' Trust (between the City and the Trust; 
City as Lessor, Trust as lessee) 

Head Lease Supplement I- Supplements the Head Lease terms and conditions by 
identifying specific Breda Vehicles (by car number) that will be leased by the City to the 
Equity Investors' Trust. 

Sublease Agreement - Establishes the terms and conditions under which the City will 
lease back the Breda Vehicles from the Equity Investors' Trust. Agreement is between 
the Trust and the City, with the trust as the Sublessor and the City as the Sublessee. 

Sublease Supplement I - an agreement that supplements the terms and conditions of the 
Sublease by identifying specific Breda Vehicles (by car number) that will be subleased 
back from the Equity Investors' Trust. 

Payment Agreement - an agreement between the City and the Equity Investors' Trust, 
which establishes terms and conditions under which the City will pay sublease rent. 

Support and Access Agreement- Establishes terms and conditions under which the City 
will provide support and access if the City chooses not to purchase the Breda Vehicles at 
the end of the Sublease term (between City and Equity Investors' Trust). 

Tax Indemnification Agreement - Establishes the terms and conditions under which the 
City will indemnify the Equity Investors. 

Insurance and Indemnity Agreement - Agreement between the City and each of the 
Strip Surety Policy Providers (FSA and ACE), which establishes the terms and conditions 
under which the City will indemnify the Strip Surety Policy Providers. 

Custody Agreement - Agreement between the City and the Trustee (State Street) 
establishing the terms and conditions under which the U.S. Government securities placed 
in escrow will be held. 
Equity Collateral Security Agreement - Agreement among the City, the Equity 



Municipal Transportation Agency 
City and County of San Francisco 



ATTACHMENT IV 
Page 14 of 14 



Investors' Trust and the Trustee (State Street) tk.it provides a security interest to the 
Equity Investor in the Equity Securities held in i lie Custodian Account. 



66 




ATTACHMENT V 
Page 1 of 4 



Municipal Transportation Agency 
City and County of San Francisco 




MEMORANDUM 



To: Members of Finance Committee 

Board of Supervisors 

From: Michael T. Burns 

Director 
Municipal Transportation Agency 

Virginia Harrington 

Deputy General Manager, Finance & Administration 

San Francisco Municipal Railway 

Date: March 12, 2002 

Subject: Use of One-Time Revenues from Proposed Breda Leveraged 
Lease-Leaseback Transaction 

The purpose of this memorandum is to describe Muni's plans for the use of the one-time 
revenues from the proposed leveraged lease-leaseback transaction involving Muni's 
Breda Light Rail Vehicles. This memorandum will supplement the information provided 
to the Committee by the Budget Analyst, as well as information provided to the 
Committee by Muni regarding the structure of the transaction itself. 

Estimated One-Time Revenue 

Muni's financial advisors estimate the one-time revenue from the first tranche of the 
leveraged lease-leaseback transaction (118 vehicles) to be approximately $33.0 million. 

Because these revenues are being derived from capital assets, and are one-time in nature, 
they are appropriate for use for non-recurring costs. Muni has identified several 
investments for these funds. Some are one-time expenses contained in the current year 
operating budget and others are currently not funded as part of our capital program. 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCISCO-CA. 94102-4524 
■ {41 5) 554-6896 FAX (4 15)5 54-4 143 



67 



ATTACHMENT V 
Page 2 of 4 

Municipal Transportation Agency 
City and County of San Francisco 

Fiscal Context - FY2002 and FY2003 Operating Budgets 

As with other City Departments, the economic recession has significantly affected 
Muni's operating revenues. For Fiscal Year (FY) 2002, Muni estimates that it faces an 
$17 million shortfall in actual revenues versus budget. This shortfall includes a: 

• $3 million reduction in General Fund support compared to the FY2002 budget; 

• $6.7 million reduction in fare revenue compared to the budget; and 

• $7.3 million reduction in sales tax revenues from the Metropolitan Transportation 
Commission (MTC), parking revenues, advertising and other sources. 

For FY2003, Muni faces a $23.5 million revenue shortfall compared to the FY2002 
budget, combined with a $15.2 million increase in mandated expenditures (primarily for 
cost of living adjustments in connection with collective bargaining agreements), yielding 
a $38.7 million budget gap. 

For both FY2002 and FY2003, Muni has developed plans to balance its operating 
budgets without making significant changes to service levels, without cutting existing 
staff, without changing fare levels, and without requesting additional support from the 
General Fund. In order to accomplish these objectives, Muni has had to rely on a portion 
of the one-time revenues from the proposed Breda lease-leaseback transaction. 

Use of Breda Revenues for FY2002 Budget 

For FY2002, Muni intends to utilize approximately $5 million in Breda revenues to fund 
expenses that otherwise would have been funded from the operating budget, and that 
should not be deferred or eliminated. All of these expenses are eligible to be funded with 
capital monies, but either no capital funds or inadequate funds are available for these 
projects. These include: 

Geneva Carhouse canopy $500,000 

Scheduling system $500,000 
Vehicle Maintenance System/Material 

Management System $1,000,000 

Non-revenue vehicle replacement $420,000 

PCC Painting Program $604,000 

Facilities Maintenance/Capital 

Improvement Projects: track/roadbed 

and misc. facilities $400,000 

Elevator/escalator $695,000 

401 VAN NESS AVENUE-SUITE 334 -SAN FR ANCISCO-CA. 94102-4524 
S(41 5) 554-6896 FAX (4 15)5 54-4143 



68 



ATTACHMENT V 



Page 3 of 4 
Municipal Transportation Agency 
City and County of San Francisco 



Information Technology Procurement S891.0O0 

Total 55,010,000 



The use of Breda one-time revenues in FY2002 will permit Muni to stay within budget 
without sacrificing essential upgrades to its facilities, equipment and information 
technology. 

Use of Breda Revenues for FY2003 Budget 

For FY2003, Muni intends to utilize $854,000 in Breda revenues to fund expenses that 
otherwise would have been funded from the operating budget, and that should not be 
deferred or eliminated. These include: 

• PCC Painting - $604,000 

• Signage Improvements - $250,000 

In addition, the FY2003 budget relies on Breda revenues indirectly, to compensate for the 
use of $10 million in Federal funds for preventive maintenance, an operating expense. 

As background, under the most recent Federal surface transportation authorization bill, 
known as "TEA-21," Federal Transit Administration Section 5307 capital funds are 
eligible to be used for preventive maintenance purposes. This is a common business 
practice for other transit systems throughout the country. For Muni, preventive 
maintenance can improve the reliability of its vehicles and facilities, which in turn would 
improve Muni's ability to meet the Service Standard Goals established in Proposition E. 
To date, the MTC, which administers the 5307 funds for the Bay Area region, has been 
reluctant to allow transit agencies to use 5307 funds for preventive maintenance purposes 
as a policy matter, due to the extensive backlog transit capital needs throughout the 
region. 

Muni has discussed the current economic and budgetary situation with MTC, and we are 
working with them to allocate available funding from capital to preventive maintenance 
operating costs for a two-year period. $10 million would be allocated in FY2003 for this 
purpose. This strategy is in accordance with economic forecasts, which predict a short- 
term decline in the economy and a recovery beginning mid-way through FY2003. Muni 
has committed to identifying additional capital funding in future years from another 
source, such as Breda lease-leaseback revenues, and will not request further allocations 
from the MTC for capital projects during this time period. 



401 VAN NESS AVENUE-SUITE 334 -SAN FR ANCISCO-CA. 94102-4524 
S(41 5) 554-6896 FAX (4 15)554-4 143 



69 



ATTACHMENT V 



Page 4 of 4 
Municipal Transportation Agency 
City and County of San Francisco 



As a result, Muni may allocate up to SI million of the Breda revenues to replace the $10 
million in Section 5307 funding that will be used for preventive maintenance. 

Uses of Remaining Breda One-Time Revenues - Capital Projects 

Assuming total revenues of $33 million for the first tranche of the transaction, and that up 
to approximately SI 5 million of that amount is used for the FY2002 and FY2003 budget 
measures discussed above, approximately $18 to $28 million (depending on the 
allocation of revenues to replace the Section 5307 funding) would be available to fund 
capital projects. 

Muni has identified six categories of capital projects that it will target for the use of 
Breda revenues. These categories are: 

• Service Reliability 

• Accessibility/ADA 

• Safety/Security/Training 

• Environmental 

• Facility Modifications 

• Capacity Expansion 

The eventual use of these funds will be subject to the normal review and approval process 
by the Municipal Transportation Agency Board of Directors and the Board of 
Supervisors. 



401 VAN NESS AVENUE-SUITE 334 -SAN F R ANCISCO-CA. 94102-4524 
S(41 5) 554-6896 FAX (4 15)554-4143 



ATTACHMENT VI 



Total Termination Values 
for all Equity Investors 



57.517,040.90 

62.334.061.60 

62.747.077.98 

71.139.148.37 

71.491.522.92 

79,444.284.13 

79.731.923.54 

87.340.159.86 

87.574.026.48 

94.607.074.10 

94,746. US. 40 

101.282.534.57 

101.360.417.49 

107.234.909.89 

107.204.259.53 

112.476.512.78 

112.372.779.83 

117.018.557.30 

116.812.120.62 

120.696.248.36 

120.382.211.53 

123.450.998.48 

123.020.807.01 

125,110.234.29 

124.541.247.42 

125.675.017.47 

124.979.443.70 

125.045.086.42 

124.198.164.16 

123.126.003.40 

122.125.450.55 

119.850.330.76 

118.682.866.64 

115.066.772.64 

113.715.444.94 

108.627.559.64 

107.077.328.44 

100.356.789.67 

98.587,940.46 

90,128.960.90 

88.142.114.77 

78.013.230.31 

75.812.782.24 

64.406.602.65 

62.036.925.66 

49.826.894.35 

47.311.699.68 

34.351.872.21 

31.682.223.91 

3.436.754.55 

14.888.748.39 

2.171.676.96 

11.087. 106.91 

3.082.962.78 

2.147.603.14 

1.854.654.3! 



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76 




ATTACHMENT VIII 
Page 1 of 6 

Municipal Transportation Agency x^LQ^s 

City and County of San Francisco 




MEMORANDUM 



To: Members of Finance Committee 

Board of Supervisors 

From: Michael T. Burns 

Director 
Municipal Transportation Agency 

Virginia Harrington 

Deputy General Manager, Finance & Administration 

San Francisco Municipal Railway 

Date: March 20, 2002 

Subject: Proposed Breda Leveraged Lease-Leaseback Transaction 
Equity and Lender Procurement Process 

The purpose of this memorandum is to describe the process that was used to 
competitively procure the Equity Investors and Lender/Surety/Payment Undertaker for 
the proposed leveraged lease-leaseback transaction involving Muni's Breda Light Rail 
Vehicles. This memorandum will supplement the information provided to the Committee 
by the Budget Analyst, as well as information provided to the Committee by Muni 
regarding the structure of the transaction itself. 

Equity Investors 

On April 25, 2001 an Information Memorandum (the equivalent of a Request for 
Proposal) was issued to over 20 potential investors. On May 11, 2001 a total of four (4) 
proposals were received from Canadian Imperial Bank of Commerce, Fleet Capital 
Leasing, Bank of America Leasing & Capital, and Capstar Partners. 

The bids were reviewed and analyze by Muni's financial advisors (Global Capital 
Finance and LIATI Group). The bids were evaluated based upon, but not limited to, the 
following criteria: 

• Up Front Benefit offered to Muni 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCISCO-CA. 94102-4524 
■ (41 5) 554-6896 FAX (415)554-4143 



77 



ATTACHMENT VIII 



Page 2 of 

Municipal Transportation Agency 
City and County of San Francisco 



• Experience completing similar transactions with public agencies 

• Willingness to underwrite most transaction expenses 

• Risks of proposed transaction structure 

• Ability/Willingness to meet City HRC requirements 

On May 25, 2001 a meeting was held to evaluate the proposals with the evaluation 
committee comprised of Muni staff (Gigi Harrington, Bob Kuo, Fred Clarke), City 
Attorney's Office (Michelle Sexton, Dave Sanchez), Outside Legal Counsel (Cliff 
Gerber). 

Based on the evaluation of the bids received the committee recommended awarding the 
transaction to CIBC. CIBC was ranked highest based on the combination of factors, 
specifically, CIBC offered the highest up front benefit to Muni, was willing to cover 
transaction expenses in the event of a broken deal, and had a demonstrated track record of 
successfully closing similar transactions with other public transit agencies (see Table A 
below). 



Table A: Leveraged 


Lease Financin 


g for Each Bid 


May 2000 






CIBC 


Fleet 


1 st Union/ 
Wells Fargo 


Bof A 
Leasing 


Projected Net 
Benefit to Muni 


S29.5m 


$28. 8m 


S24.3m 


$23. lm 


% of Vehicle 
Market Value for 
each Tranche 


9.22% 


8.99% 


7.60% 


7.21% 



Lender/Surety Provider/Payment Undertaker 

On May 18, 2001 a Letter Request for Proposal was sent to eight (8) banking and 
insurance firms that specialize in providing loans, strip surety policies and debt and 
equity payment undertaking services for leverage lease/leaseback transactions. On May 
23, 2001 proposals were received from three (3) firms; Financial Security Assurance Inc. 
(FSA)/Dexia, AIG Financial Products, and Ambac. 

The bids were reviewed and analyze by Muni's financial advisor, Global Capital Finance. 
The bids were evaluated based upon, but not limited to, the following criteria: 



401 VAN NESS AVENUE-SUITE 334 -SAN F RANCISCO-CA. 94102-4524 
S(415) 554-6896 FAX (4 15)554-4 14 3 



78 



ATTACHMENT VIII 



Page 3 of 6 
Municipal Transportation Agency 
City and County of San Francisco 



• Overall cost 

• Relevant experience 

On May 25, 2001 a meeting was held to evaluate the proposals with the evaluation 
committee comprised of Muni staff (Gigi Harrington, Bob Kuo, Fred Clarke), City 
Attorney's Office (Michelle Sexton, Dave Sanchez), Outside Legal Counsel (Cliff 
Gerber). 

Based on the evaluation of the bids received the committee recommended awarding the 
Lender/Strip Surety Provider/Payment Undertaker services to FSA. FSA was ranked 
highest based on the fact that they offered the lowest overall costs to Muni. The next 
lowest bidder was approximately $200,000 higher than the FSA's bid. It was determined 
that all three firms had sufficient relevant experience with providing these types of 
services; therefore, cost became the deciding factor. 



401 VAN NESS AVENUE-SUITE 334 -SAN FRANCISCO-CA. 94102-4524 
S(415) 554-6896 FAX (415)554-4143 



ATTACHMENT VIII 



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ATTACHMENT IX 



Page 1 of 5 



U.S. Department 
of Transportation 
Federal Transit 
Administration 



Office of Chief Counsel 
400 Seventh St., S.W. 
Washington, D.C. 20590 



FEB | I 



Mr. Michael T. Burns 

General Manager 

San Francisco Public Transportation 

Department (MUNI) 
401 Van Ness Avenue, Suite 334 
San Francisco, CA 94102 



Dear Mr. Burns: 



R) E0E! W 

H\ 



PUBLIC TRANSPORTATION 
DEPARTMENT 



r\ 



u, 



Re: Leveraged Lease Transaction - 
Continuing approval & Clarification 



Thank you for notifying FTA of the potential for an additional equity investor joining 
the leveraged lease-to-service contract transaction approved by the Administrator on 
January 29, 2002. This letter is confirmation of FTA's continued approval of the 
transaction, provided: 

1. That the structure of the transaction is not otherwise materially altered from the 
structure reviewed by FTA; and 

2. That the new equity investor is of comparable credit quality to the equity 
participants in the existing transaction. 

In addition, in reply to a request from your financial advisor, for purposes of 
clarification, you may consider Conditions 3 and 4 in the September 28, 2001 [approval 
letter] as replaced with the following: 

3. If MUNI should discontinue using the rail cars for mass transit purposes or does 
not repurchase all of the CIBC World Markets' and other equities' interests 
pursuant to Section 14 of the sublease agreement, MUNI must immediately 
notify FTA in writing. FTA then will issue instructions consistent with its rules 
and regulations. Currently those rules and regulations for rail cars are set forth 
in 49 CFR 18.32, FTA Circular 5010.1C, Grant Management Guidelines (October 
1, 1998), and Section 19 of the FTA Master Agreement (MA-8). 



83 



ATTACHMENT IX 

Page 2 of 5 

4. Although FTA grants MUNI approval to enter into this lease transaction, such 
approval does not include prior approval of any service contract to be executed 
pursuant to Section 14(d) of the sublease agreement. MUNI must seek FTA 
approval of a specific service contract, if any, in the notification referred to in the 
preceding paragraph. 

I look forward to hearing of the successful closing of this transaction. 

Sincerely, 




William Sears 
Chief Counsel 



R/, 



2S25S67116 
.'an-29-0? 08:A6a« Frca-Otiice of Buc'eet ana Foncy 



2023667116 



T-6S6 P 001/003 F-381 



© 



US DepoTmenr 
of Trcnsponcnion 

Federal Transit 
Administration 



Admin S'.rSlOr 



JAN 2 9 2002 



ATTACHMENT TY 
Page 3 of 5 



4GO Sevtntn Si , S w. 
Wasiiagton, D.C. 20590 



Mr. Michael T. Bums 
General Manager 
San Francisco MunicipaJ Railway 
401 Van Ness Avenue, Suite 334 
San Francisco. CA 94102 



Dear M/Buxns: "^VWW^ ' 



Re: MUNI 2001 Statutory Trust and 
Defeased Lease-Leaseback Transaction 



The Federal Transit Administration (FTA) has reviewed the draft operative 
documents describing a proposed U.S. leveraged lease (lease-to-service contract) 
involving 150 light rail cars, between the San Francisco Municipal Railway 
(MUNI) and CIBC World Markets Corporation with Comerica Leasing and Wells 
Fargo Equipment Finance, as the equity investors. This letter applies to both 
tranches of the light rail car lease. Based on FTA's review of these documents 
and of various supporting materials submitted by MUNI, I hereby approve this 
transaction. 

It is my understanding that under this transaction, MUNI will lease up to 150 
light rail cars built by Breda, with an appraised value of as much as $465 million, 
then lease back the rail cars under a lease-to-service contract for from 20 to 27 
years, depending on the age of the equipment. At the fixed purchase option 
date, MUNI will be able to make a final payment based on a calculation agreed- 
upon at closing, thus clearing any encumbrances from this transaction. 

FTA finds that this transaction as represented in the operative documents and 
supporting information conforms to FTA's guidelines concerning tax- 
advantaged leases. First, an economic analysis provided by MUNI indicates that 
the benefits to it will outweigh the costs of the transaction. Secondly, the draft 
operative documents indicate that MUNI will be able to ensure continued use of 
the vehicles in mass transit service, as required by the Federal Transit Laws (49 
U.S.C. § 5301 etseq .) and Paragraph 7(c) of FTA Circular 7020.1, Cross-Border 
Leasing Guidelines (April 26, 1990). In particular, provisions of the sublease 
agreement governing quiet enjoyment, insurance and maintenance of the railcars 
ensure MUNI'5 continued possession and ooeradon of the vehicles. 



v » 



Jan-29-OZ OB.-ifair. Fron-Oiiice of Budget ano Policy 202366*116 T-68E P 002/CC3 F-381 

ATTACHMENT IX 

Page 4 of 5 
Finally, FT A finds that the operative documents adequately address indemnities, 
unwind risks, substitution for loss of equipment, and events of default FTA 
reminds MUNI that notwithstanding such events, MUNI must meet its 
obligations under FTA regulations and the requirements of its grant agreement 
with FTA. 

I therefore consent to MUNI's execution of this transaction, subject to the 
following conditions: 

1. MUNI agrees to comply with the basic terms and conditions underlying FTA 
assistance agreements through which Federal funds were used to acquire the 
rail cars in question. I understand that these were purchased in part with 
Federal grant funds. 

2. The transaction will be implemented and completed as described in the 
operative documents submitted to FTA seeking the agency's consent to the 
transaction. 

3. If MUNI should discontinue using the rail cars for mass transit purposes or 
does not repurchase all of CIBC World Markets' and other equities' interests 
at the fixed purchase option date, MUNI must immediately notify FTA in 
writing. Notwithstanding any language to ihe contrary in the operative 
documents, MUNI is bound by, and FTA then will issue, instructions 
consistent with 49 CFR § 18.32 or 49 U.S.C 5334 (g) and Paragraph 7(d) of 
FTA Circular 7020.1 (April 26, 1990, and as amended from time to time), as 
appropriate. 

4. FTA's approval of this transaction does not include prior approval of any 
service contract to be executed pursuant to Section 14(d) of the sublease 
agreement. MUNI must seek FTA approval of any such contract in the 
notification referred to in the preceding paragraph. 

5. MUNI shall notify FTA immediately of any material changes in its financial 
condition or in the terms of the transaction following the date of this finding 
to the end of the sublease term. 

6. FTA may exercise its right to direct use of the program income earned by 
MUNI from this traiisaction to a particular capital or operating need. 

7. Finally, upon closing this transaction, MUNI is required to provide FTA with 
the following information or material: 

a. Executed copies of the operative documents for the transaction and 
related opinions of counsel; 



Jan-29-32 08:£6an Froa-Of f ice of Buoget and Pol icy 2CZ3SB71 16 T-E8S P 003/003 f-381 

ATTACHMENT IX 

Page 5 of 5 

b. A separate set of the operative documents and related opinions of 
counsel, signed or unsigned but as executed, marked up to show any 
changes from the versions sent to FTA for approval; 

c. Copies of all filings by MUNI regarding the transaction made xvith 
government agencies; 

d. A statement of opinion by the equity investor that this transaction will 
generate a positive Federal income tax revenue over the anticipated 
term of the transaction; 

e. A statement oi the amount of proceeds from the transaction; and 

f. A statement of the total costs of the transaction, including but not 
limited to. all fees paid by the lessee and lessor to any broker, arranger, 
financial institution, legal counsel, appraiser or other consultants or 
advisors. 

FTA's consent to this transaction shall be void if there are any substantive or 
material changes in the terms reflected in the final draft operative documents 
submitted to us. 



Sincerely, 




87 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Item 4 - File 02-0388 

Department: 

Item: 



Services to be 
Performed: 



Description: 



Parking and Traffic (DPT) 

Resolution concurring with the Controller's certification 
that janitorial services at 21 off-street, metered parking 
lots and five DPT facilities can continue to be practically 
performed by a private contractor at a lower cost than if 
the work were performed by City employees. 

Janitorial services at 21 off-street, metered parking lots 
and five DPT facilities. 

Charter Section 10.104 provides that the City may 
contract with private firms for services which had been 
performed by City employees if the Controller certifies, 
and the Board of Supervisors concurs, that such services 
can in fact be performed by private firms at a lower cost 
than similar work services performed by City employees. 

The Controller has determined that contracting for 
janitorial services at 21 off-street, metered parking lots 
and five DPT facilities for FY 2001-2002 would result in 
the estimated savings as follows: 



Comments: 



City-Operated Service Costs 

Salaries 
Fringe Benefits 
Total 



Estimated Total Contract Costs $185.700 



Lowest 


Highest 


Salary 


Salary 


Step 


Step 


$163,598 


$193,499 


47.442 


52.037 


$211,040 


$245,536 


$185,700 


$185,700 


$25,340 


$59,836 



Estimated Savings 



1. Custodial Janitorial currently provides janitorial 
services at the 21 off-street, metered parking lots and five 
DPT facilities. Attachment I, provided by DPT, is a list of 
these 26 locations and the frequency of service at each of 
these locations. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



2. DPT reports that this service was first certified as 
required by Charter Section 10.104 in 1985 and has been 
provided by an outside contractor since that time. 
According to Mr. Ruble, as stated in Attachment II, the 
contract has been on a month-to-month basis since 
January 1, 1999 because at that time, the Purchaser's 
Office requested that DPT allow this contract to 
transition to a month-to-month basis until the workload 
at the Purchaser's Office allowed for the administration of 
re -bidding janitorial services. 

3. According to Mr. Ruble, DPT put this contract out for 
competitive bid on February 8, 2002. The bids are due on 
March 25, 2002. According to Mr. Ruble, DPT intends to 
award a new contract by April 8, 2002, once this proposed 
resolution is approved by the Board of Supervisors. 

4. The Estimated Total Contract Cost used for the 
purpose of this analysis is based on DPTs estimate of the 
FY 2001-2002 cost of the new contract. 

5. The Controller's supplemental questionnaire with the 
Department's responses is shown in Attachment III to 
this report. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



PARKING ftUTHGRITY 



PHONE NO. 



554 sess 



CITY AND COUNTY OF SAN FRANCISCO 

OFFICII OF CONTRACT ADMINISTRATION 

PURCHASING DIVISION 



Attachment I 
Page 1 of 2 

CONTRACT PROPOSAL 
83646 



JANITORIAL SERVICES FOR 
PARKING AND TRAFFIC OFFICES AND OFF-STREET PARKING LOTS 

For the Term May 1, 2002 through April 30, 2005 



C. DESCRIPTION 
Area 1 



SPECIAL CONDITIONS (Continued) 
OF FACILITIES COVERED AND FREQUENCY OF SERVICE: 



FACILITY 


ADDRESS/LOCATION 


NUMBER 1 
OFsSTALLS 1 


SERVICE 
FREQUENCY 


STEAM 
CLEANING 


1. 


Pierce and Lombard 


3252 Pierce Street 


116 


MTWThFSa 


6 


■) 


California & Steiner 


2450 California Street 


48 


MTWThFSa 


2 


3. 


Castro & 18 lh 


457 Castro Street 


20 


MTWThFSa 


4 


4. 


18 th & Collinswood 


4116- 18 ,h Avenue 


28 


MTWThFSa 


4 


5. 


8 th & Clement 


324 - 8 th Avenue 


26 


MTWThFSa 


2 


6. 


9 ,h & Clement 


330 -9 th Avenue 


21 


MWFSa 


1 


7. 


1 8 th & Geary 


421 -18 th Avenue 


34 


MWFSa 


1 


S. 


21" & Geary 


5732 Geary Blvd. 


21 


MWThFSa 


2 


9. 


6 lh & Irving 


1355-6* Avenue 


51 


MTThSa 


1 


10. 


7 ,h & Irving 


1340 -7 th Avenue 


36 


MTThSa 


1 


11. 


9 th &. Irvine 


1325 -9 th Avenue 


41 


MTThFSa 


2 


12. 


20 ,h & Irving 


1275 -20 ,k Avenue 


24 


MTWThFSa 


2 


Total 


466 



FRQU : PARKING PUTHCRITY 



FHONE ND. 



3< S2S5 



CITY AND COUNTY OF SAN FRANCISCO 

OFFICE OP CONTRACT ADMINISTRATION 

PURCHASFNG DIVISION 



Attachment I 

Page 2 of 2 

CONTRACT PROPOSAL 
83646 



JANITORIAL SERVICES FOR 
PARKING AND TRAFFIC OFFICES AND OFF-STREET PARKING LOTS 

For the Term May 1, 2002 through April 30, 2005 



SPECIAL CONDITIONS (Continued) 



Area 2 



[ 

FACILITY 


ADDRESS/LOCATION 


NUMBER 
OF STALLS 


SERVICE 
FREQUENCY 


STEAM 
CLEANING 


1. 


Junipero Scrra & Ocean 


2500 Ocean Avenue 


20 


MWF 


1 


2. 


19* & Ocean 


3000 - 19 th Avenue 


20 


MWF 


1 


3. 


Claxemont & Ulloa 


807 Ulloa 


23 


MTWThFSa 


4 


4. 


West Portal 


174 West Portal Avenue 


19 


MWFSa 


1 


5. 


24 th & Noe 


4061 -24 ,h Street 


16 


MTThFSa 


4 


6. 


24 & Capp 


1 Lilac @ 24 th &. Capp 


19 


MTWThFSa 


4 


7. 


Mission & Norton 


20 Norton 


28 


MTThSa 


2 


8. 


Fclton & San Bruno 


25 Felton Street 


10 


MTThFSa 


2 


9. 


Diamond & Wilder 


Comer of Diamond &. 
Wilder 


25 


MthSa 





10. 


PCO Trailer DPW Yard 


2323 Cesar Chavez Street 


n/a 


MTWThF 





11. 


Sign Shop & Bryant 


1999 Bryant Street 


n/a 


MTWThF 





12. 


Paint Shop @ Charter 


80 Charter Oak Blvd. 


n/a 


MWF 





13. 


PCO Trailer® 10 th St. 


10 th & Bryant Streets 


n/a 


MTWThF 





14. 


6 th & Townsend PCO 


Comer of 6 ,h & Townsend 


n/a 


TthSa 





Total 


180 



83W6.Doc 
0i'09.'O2 - 3.\A/dsh 



Page 20 of 4! 91 



9-0; 
Printed on }0% PCW RrtycliO Paper 



FROM : PARKING AUTHORITY 



San f r a n c i s c o 



FHONE NO. 



Attachment II 
554 5355 Page 1 of 1_ 

City and County of San Francisco 




DEPARTMENT OF PARKING & TRAFFIC 




WILUE LEWIS BROWN, JR., Mayor 

FRED M. HAMDUN. EXECUTIVE DIRECTOR 

RONALD SZETO. ACTING DIRECTOR, PARKING AUTHORITY 



MEMORANDUM 



DATE: 
TO: 

FROM: 

RE: 



03/13/02 

Anna LaForte, Analyst 
Office of the Budget Analyst 

Scott Ruble, Property Manager *C5^ > 
San Francisco Parking Authority < 

Proposition J Certification 



Thank you for your efforts in preparing the Budget Analyst materials for the Department 
of Parking and Traffic's Proposition J Certification resolution for the Board of Supervisors. 

This Proposition J Certification resolution relates to the Department's bid for janitorial 
services at twenty-one off-street metered lots and five other DPT facilities. This bid is 
being administered by the Purchaser at this time. While janitorial services similar to those 
described in the scope-of-work of this new bid are currently provided by an independent 
contractor, this is a new and wholly separate bid, with many of the provisions of the 
contract's scope of work modified from the current example. 

The current contract for similar services has been on a month-to-month basis since 
January 1 , 1 999. Previous to this month-to-month status, the contract operated on a one- 
year extension with a term of January 1, 1998 through December 31, 1998. 

Shortly before the expiration of this one-year extension, the Parking Authority contacted 
the Purchaser's Office, expressing interest in re-bidding these services, as the contract 
extension was soon to be exhausted. This was the last year (1998) in which the contract 
was brought before the Board of Supervisors for annual Proposition J certification renewal. 

At that time, the Purchaser's Office requested that Parking and Traffic allow the contract to 
transition to a month-to-month basis until the workload at the Purchaser's Office allowed 
for the administration of re-bidding the janitorial services. 



(415)5S*-PARX FAX (415) 554-98:14 



25 Van Ness Avenue, Suite 410 
92 



San Francisco. CA 94102-4576 



PARKING AUTHORITY PHONE NO. : 534 SS95 



Anne LaForte 
0S/\3.'Q2 

Page 2 of 2 



nuLdumieULU 

Page 2 of 2 



It is this juncture in the history of the contract where annual renewal of Proposition J 
certification was overlooked. Due to the workload of the Purchaser's Office and 
understating at the Parking Authority of DPT, the responsibility for annual renewal was 
unclear and overlooked until this year. This year, the Parking Authority added a staff 
member and the effort to re-bid the contract was renewed. The Parking Authority was 
unaware that Proposition J certification was not occurring, but readily admits to its 
responsibility in administrative oversight of tiiis mandate. 

In the future, this contract will be under the administrative responsibility of the Property 
Manager of the Parking Authority. Additionally, the Parking Authority will add the annual 
renewal of Proposition J certification to its "tickle list" of legislative responsibilities to 
assure that certification renewal occurs each year in a timely manner. 



Ronald Szeto, Acting Director, Parking Authority 
Steven Lee, Principal Analyst, Parking Authority 
Diana Hamruons, Director of Government Affairs, DPT 



H:\PARKrNG'»Board of SupcmsorjVprop j Itr respcu; budge- analyst 3-02.doc 

93 



\ ..rcr. -,-,.* - Attachment III 
ent By: HP LaserJet 3100; 4155547714; . 



CHARTER 10.104.15 (PROPOSITION J) QUESTIONNAIRE 

DEPARTMENT: _Parkinn Authority Department of Parking and Traffic 

CONTRACT SERVICES: _J3nitcrial and landscaping sen/ices 

CONTRACT PERIOD: _ 36 month period beginning Winter or Soring 2002 

(1 ) Who performed the activity/service prior to contracting out? This service has been contracted out since 
prior to 1995 and beyond the institutional memory of current Parking Authority staff. 

(2) How many City employees were laid off as a result of contracting out? None. Not applicable. 

(3) Explain the disposition of employees if they were not laid off. Not applicable. 

(4.) What percentage of City employees' time is spent of services to be contracted out? Not applicable. 



(5) How long have the services been contracted out? Is this likely to be a one-time or an ongoing request for 
contracting out? This service has been contracted out since prior to 1995 and beyond the institutional 
memory of current Parking Authority staff. This will likely be an ongoing request for contracting services. 



(6) What was the first fiscal year for a Proposition J certification? Has it been certified for each subsequent 
year? The prior contract for these services received Proposition J exemption in 1995. 



(7) How will the services meet the goals of your MBE/WBE Action Plan? This bid process, handled by the 
Office of Contract Administration, will comply with all HRC MBE/WBE regulations and bid discounts. 



(8) Does the proposed contractor provide health insurance for its employees? There is no proposed 
contractor, but awarded contractor will comply with all applicable municipal regulations. 



(9) Does the proposed contractor provide benefits to employees with spouses? If so, are the same benefits 
provided to employees with domestic partners? If not, how does the proposed contractor comply with the 
Domestic Partners ordinance? There is no proposed contractor, but awarded contractor will comply with 
all applicable municipal regulations. 



(10) Does the proposed contractor pay meet the provisions of the Minimum Compensation Ordinance? There 
is no proposed contractor, but awarded contractor will comply with all applicable municipal regulations. 



94 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Item 5 - File 02-0395 
Departments: 

Item: 



Amount: 
Source of Funds: 

Description: 



Library 

Art Commission 

Resolution authorizing the San Francisco Public Library 
to accept and expend a gift in the amount of $150,100 
from the Friends and Foundation of the San Francisco 
Public Library for the Ocean View Art Project and for the 
James C. Hormel Gay and Lesbian Center 

$150,100 

The Friends and Foundation of the San Francisco Public 
Library, a non-profit organization 

The proposed resolution authorizes the Public Library to 
accept and expend a total gift of $150,100 from the 
Friends and Foundation of the San Francisco Public 
Library, a non-profit organization dedicated to raising 
funds to assist the Library. The subject gift consists of (a) 
$125,000 to support the artist selection process as well as 
the design, development, materials, installation and 
maintenance of a piece or pieces of art at the Ocean View 
Branch Library and (b) $25,100 for an existing library 
staff person to preserve, catalog and make accessible the 
Harry Hay and Dorr Jones collections of historical 
material at the James C. Hormel Gay and Lesbian 
Center, a research center located at the Main Library that 
is devoted to the documentation of gay and lesbian 
culture. 



Board of Supervisors 

Budget Analyst 

95 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Budget: 



The proposed budget for the total $150,100 gift, including 
the $125,000 for the Ocean View Branch Library Art 
Project and $25,100 for Archivist Services for the James 
C. Hormel Gay and Lesbian Center, is as follows: 



Ocean View Library Art Project 
Art Development 

Maintenance of Art 

Proposal Fees (5 artists @ $500) 

Accessibility for the Visually Impaired 

Recruiting of Artists 

Panel Honorariums for Judges (5 judges @ $125) 

Copies and Slides of Proposals 

Catering at Selection Events 

Project Contingency Fund 

Art Development Subtotal 
Artistic Project 
Design Development 
Artist Design Fee 

Reimbursable Artist Design Expenses 
Engineering Consultant, if required by the project 
Project Related Overhead 

Design Development Subtotal 
Materials & Installation 
Artist Fee 

Art Materials Expenses 
Installation of Art 
Liability Insurance 

Engineering Consultant, if required by the project 
Art Production Related Overhead 
Artist Project Contingency Fund 

Materials & Installation Subtotal 
Artistic Project 



$6,250 

2,500 

3,000 

500 

625 

600 

200 

5.325 



$4,000 

500 

1,500 

300 



$15,000 

60,000 

10,000 

1,500 

2,000 

300 

10.900 



$19,000 



$6,300 



ind Lesbian Center 



.44 FTE 3630 Librarian I 
Fringe Benefits (7.5%) 





$99,700 


Subtotal 


$106,000 




Total $125,000 


$23,350 




SI. 750 





Total $25.100 
Total Budget $150,100 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Comments: 



1. According to Ms. Kathleen Lucey of the Public Library, 
the Ocean View Library Art project is a collaborative 
effort between the Library and the Arts Commission. Ms. 
Lucey reports that the Art Commission would manage an 
art competition for artists to submit design proposals for a 
new piece or pieces of art for the Ocean View Branch 
Library, choosing five finalists from the submitted 
proposals that would each be paid $500 for expenses 
related to his or her design proposal. Ms. Lucey reports 
that a five-member selection panel would then choose an 
art proposal. The selected artist, Ms. Lucey notes, would 
receive a design and an art fee as well as be reimbursed 
for materials expenses and consultants, if he or she 
requests the use of engineering, materials or architectural 
consultants. The consultants would be chosen on a sole 
source basis, at the discretion of the winning artist. Ms. 
Lucey reports that any unexpended funds from the 
proposed project would be returned to the Friends and 
Foundation of the San Francisco Library. 



2. According to Ms. Lucey, the proposed gift of $25,100 to 
the James C. Hormel Gay and Lesbian Center would 
increase the hours of an existing Library staff member 
from .50 FTE to .94 FTE to reduce the backlog of 
materials from the Harry Hay and Dorr Jones collections 
that need to be archived. Ms. Lucey advises that these 
archival services would make the Harry Hay and Dorr 
Jones collections available to the public for research and 



Recommendation: 



Approve the proposed resolution. 



Board of Supervisors 
Budget Analyst 

Q7 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Item 6 - File 02-0438 

Department: 

Item: 



Amount: 
Source of Funds: 

Description: 



Mayor's Office of Community Development (MOCD) 

Hearing to consider the release of $381,331 in previously 
reserved 1998 Community Development Block Grant 
funds for construction of a new multi-purpose 
neighborhood center to be located in Visitacion Valley. 

$381,331 

Previously reserved 1998 Community Development Block 
Grant (CDBG) funds. 

Under the 1998 CDBG Program, the Board of Supervisors 
reserved a total of $1,909,331 of the Work Force 
Development Pool pending submission by MOCD of 
expenditure plans and budget details for specific Work 
Force Development projects. Of the $1,909,331 originally 
reserved, $1,109,000 was subsequently released by the 
Board of Supervisors, leaving a balance of $800,331 still 
on reserve. 

At this time, MOCD requests that $381,331 of the 
$800,331 in currently reserved 1998 CDBG Work Force 
Development Pool funds be released to fund 
approximately 9 percent of the total $4,192,355 cost of 
The Village Community Center (The Village), a new 
multi-purpose neighborhood center to be constructed at 
1099 Sunnydale Avenue in Visitacion Valley. Upon 
completion of The Village, The Village will be operated by 
the Geneva Valley Development Corporation (GVDC). 

The GVDC is a non-profit neighborhood-based corporation 
formed with the Federal Department of Housing and 
Urban Development's (HUD's) assistance to develop 
affordable housing and community facilities in Visitacion 
Valley. A ground lease between the City and GVDC to 
construct and operate The Village was previously 
approved by the Board of Supei visors in 2000 (File 00- 
1767). 

Upon construction of The Village facility, which is 
expected to be completed in the Fall of 2003, according to 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
98 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Mr. Jon Pon of MOCD, The Village will consist of 
approximately 20,265 square feet and will include a 
multi-purpose recreation space, a public health clinic to be 
operated by the Department of Public Health (DPH), a 
classroom, a conference room, and office space for 
nonprofit organizations including the Boys and Girls Club 
of San Francisco, the Chinese for Affirmative Action, the 
Visitacion Valley Job Center, Emploj'ment and Training 
Center, the Girls After School Academy, the GVDC, and 
the Family Services Agency. The Village will also have 18 
parking spaces below ground for the community facilities. 

As noted in the attached memorandum from Mr. James 
Alexander of the DPH (Attachment I), DPH was unable to 
provide the Budget Analyst with an estimate of the 
annual General Fund monies which may be needed by the 
DPH to operate the public health clinic at The Village. 
However, Mr. Alexander states in Attachment I, "The 
Department anticipates that the satellite clinic operating 
expenses will be covered by a combination of revenues 
from public insurance programs such as Medi-Cal and 
Medicare and the reallocation of resources of an existing 
satellite clinic at Hawkins Village." 

According to Mr. Pon, Pacific Engineering Builders, 
Incorporated was selected by GVDC through a 
competitive bid process to construct The Village. Mr. Pon 
reports that all funds for the construction of The Village, 
with the exception of the subject reserved funds, have 
been obtained and construction is expected to begin on 
April 2, 2002. 

Budget: Attachment II, provided by MOCD, contains the 

construction budget and funding sources totaling 
$4,192,355 for The Village construction project including 
this subject release of $381,331 which is part of the 
$531,331 of CDBG grant funds. 

Comments: 1. According to Mr. Pon, two funding sources are not 

subject to Board of Supervisors approval, including the 
$1,500,000 HUD grant awarded to the GVDC and the 
$141,030 in private donations received by the GVDC (see 
Attachment II). 



BOARD OF SUPERVISORS 

BUDGET ANALYST 
99 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

2. Given the fact that the City is facing a projected 
$154.1 million General Fund shortfall for Fiscal Year 
2002-2003, and a projected $44 million shortfall for Fiscal 
Year 2003-2004, and given the fact that, as noted in 
Attachment I, the DPH was unable to provide the Budget 
Analyst with an estimate of the annual General Fund 
monies which may be needed by the DPH to operate the 
public health clinic at The Village, approval of this release 
of $381,331 is a policy decision for the Board of 
Supervisors. 

Recommendation: For the reason stated in Comment No. 2 above, approval 

of the release of $381,331 is a policy decision for the Board 
of Supervisors. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 
100 



City and County of San Francisco 



Attachment I 

Department of Public Health 




DATE: March 21, 2002 

TO: Anna LaForte, 

Board of Supervisors Budget Analyst 

FROM\^Ajaascs Alexander 

U 



Ty DPH Budget Manager 



RE: 



The Village Satellite Clinic 



In response to your inquiry regarding the operating costs for a DPH run satellite clinic at 
The Village: because the details of the satellite clinic program at The Village have not 
been fully developed, the Department of Public Health would not be able to quantify 
operating costs at this time. The Department anticipates that the satellite ciinic operating 
expenses will be covered by a combination of revenues from public insurance programs 
such as Medi-Cal and Medicare and the reallocation of resources of an existing satellite 
clinic at Hawkin's Village. The Hawkin's Village satellite clinic currently serves clients 
in Visitacion Valley and is scheduled to be relocated upon completion of the new site. 



Finance 



101 Grove Street 
i m 



San Francisco, CA 94102 



Attachment II 



GENEVA VALLEY DEVELOPMENT CORPORATION 

The Village Community Center- 1099 Sunnydale Avenue 
March 18, 2002 



CONSTRUCTION CONTRACT 



acoustical ceiling 


32.600 


casework 


46,900 


cmv 


47.500 


concrete 


20.500 


drywall 


109,000 


earthwork 


79,500 


electrical 


320.000 


elevator 


53.440 


fire protection 


72,000 


flooring 


45,600 


glass & glazing 


100.100 


doors & hardware 


117,300 


insulation 


19.300 


overhead door 


11.800 


painting 


51,000 


plumbing 


135,200 


roofing 


38.790 


signage 


16.100 


site utilities 


79.500 


steel 


173.000 


tile 


36.000 


Prime Contractor 


2,205.102 


Construction contract 


3,811.232 


10% Contingency 


381.123 



CONSTRUCTION BUDGET S4.192.355 



SOURCES OF FUNDING FOR CONSTRUCTION BUDGET 

HUD Upfront Grant Agreement 1 .50C.000 

MOCD/HUD Special Purpose Grant 17,994 

MOCD/CDBG Grant 531,331 

MOCD Capital Loan 2.0OC.000 

Private Funding 141,030 

TOTAL SOURCES $4,192,355 



Bids were submitted and opened at 2:00 p.m., April 26, 2001. Value engineenng and 
negotiations have continued since that time. 



102 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Item 7 - File 02-0286 



Departments: 
Items: 



Amount: 



Grant Period: 



Source of Funds: 



Required Match: 



Indirect Costs: 



Recreation and Park Department (RPD) 
Department of Public Works (DPW) 

Resolution authorizing the Recreation and Park 
Department to apply for, accept and expend State 
Department of Parks and Recreation grant funds under 
the Per Capita Grant Program (Per Capita Grant) in the 
amount of $8,111,000 and under the Roberti-Z'berg- 
Harris Urban Open Space and Recreation Block Grant 
(RZH Grant) in the amount of $5,016,627, which are both 
grant programs funded from the California Safe 
Neighborhood Parks, Clean Water, Clean Air and Coastal 
Protection Bond Act of 2000; adopting findings pursuant 
to the California Environmental Quality Act (CEQA); and 
adopting findings that such action is consistent with the 
City's General Plan and Eight Priority Policies of City 
Planning Code Section 101.1 for the Harding Park and 
the Fleming Golf Course (Harding Park) renovation 
project. 



Per Capita Grant: 

RZH Grant: 

Total Grant Amount: 



$8,111,000 

5.016.627 

$13,127,627 



Per Capita Grant Program 

Funds must be expended by June 30, 2008 

RZH Grant Program 

Funds must be expended by March 1, 2009 

The Per Capita Grant and the RZH Program Grant are 
administered under the State's Safe Neighborhood Parks, 
Clean Water, Clean Air, and Coastal Protection Bond Act 
of 2000. 

$2,149,983 (42.9 percent of the RZH Grant Program 
award of $5,016,627 which must come from a combination 
of City and private funding, see Comment No. 1). The Per 
Capita Grant Program does not require matching funds. 

The Department requests that indirect costs for the RZH 
grant be waived in order to maximize the use of grant 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

103 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

funds for direct project purposes. The Per Capita grant 
prohibits the inclusion of indirect costs. 

Description: The proposed resolution would authorize the City to apply 

for, accept and expend $8,111,000 of grant funds from the 
State Per Capita Grant Program and $5,016,627 of grant 
funds from the State Roberti-Z'berg-Harris Urban Open 
Space and Recreation Program Block Grant (RZH Grant), 
for a total grant amount of $13,127,627 to be used to 
renovate Harding Park; adopt the findings pursuant to 
CEQA; and, adopt the findings that the Harding Park 
Golf Course and Fleming Golf Course renovation project 
(Harding Park renovation project) are consistent with the 
City's General Plan and Eight Priority Policies of City 
Planning Code Section 101.1. The subject grant funds 
consist of one-time awards from two grant programs that 
the State Department of Parks and Recreation 
administers under the Safe Neighborhood Parks, Clean 
Water, Clean Air and Coastal Protection Bond Act of 
2000. 

According to Mr. Gary Hoy of the Recreation and Park 
Department (RPD), the renovation of Harding Park, 
adjacent to Lake Merced in the southwestern corner of 
San Francisco, has been planned for two and a half 3 r ears 
and has undergone extensive public comment and review 
by the RPD Commission. The proposed renovation project 
is estimated to cost a total of $16,027,610. 

The proposed Harding Park renovation project would 
consist of (a) renovating and upgrading the 18-hole 
Harding golf course and the adjoining 9-hole Fleming golf 
course, (b) demolishing existing buildings, except for the 
existing restaurant and golf cart barn, renovating the 
existing parking lot at Harding Park and constructing a 
new Clubhouse, which would include a new restaurant, (c) 
constructing a new maintenance facility for equipment, 
vehicles and supplies and (d) constructing a new driving 
range. After renovations are completed to the standards 
set forth in the proposed PGA Master Tournament 
Agreement, the Harding Park Golf Course would fulfill 
the PGA's requirements for Harding Park and would then 
become the West Coast home of the PGA Tour 
Championship events (see File 02-0201). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

104 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Mr. Hoy advises that the RPD would work-order 
$2,015,500 to the Department of Public Works (DPW) to 
provide the following services for the aforementioned 
projects: (a) design and engineering services (except for 
the design and engineering services for the renovation of 
the golf courses which would be provided by the First Tee 
Program at a cost of $750,000, which is $33,339 more 
than the $716,661 of private matching funds required by 
the grant, see Comments No. 1 and 2), including 
architectural design, landscaping and structural, site, 
hydraulic, electrical, mechanical and traffic engineering 
(b) construction management, and (c) project 
management. 

Additionally, the proposed resolution authorizes the 
Board of Supervisors to adopt findings that the proposed 
Harding Park renovation project would be conducted 
pursuant to the California Environmental Quality Act 
(CEQA) and that the proposed renovation is consistent 
with the City's General Plan and Eight Priority Policies of 
City Planning Code Section 101.1. 

Harding Park 

Renovation Project 

Budget: A summary budget for the total project costs of 

$16,027,610, funded by the $8,111,000 of subject grant 
funds from the Per Capita grant, $5,016,627 of subject 
grant funds from the RZH grant, $2,149,983 in City 
matching funds and $750,000 of private matching funds, 
is as follows: 

Expenditure 
DPW Design, Engineering, 
Construction Management, 

Project Management $2,015,500 

Golf Course Design and 

Engineering 750,000 

Permits and Fees 471,000 

Construction Costs 12.791,110 

Total Project Expenditures $16,027,610 

Attachment I, provided by the RPD, provides additional 
budget details for the design and engineering, 
construction management and project management to be 
provided by the DPW, in the amount of $2,015,500. In 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

"lOS 



\ 

Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

addition, the $750,000 in private matching funds is to be 
contributed to the project in the form of golf course design 
and engineering plans provided by a golf course designer 
and the Professional Golfer's Association through the non- 
profit First Tee Program (see Comment 2). 

The $16,027,610 project expenditures and funding sources 
are as follows: 

Expenditure bv Facility 

Golf Course Renovation $8,419,210 

New Clubhouse 5,512,000 

New Maintenance Facility 1,214,000 

New Driving Range 882.400 

Total Project Expenditures $16,027,610 

Project Funding Sources 

State Grant Monies $13,127,627 

RPD Matching Funds 2,149,983 

Private Matching Funds 750.000 

Total Funding $16,027,610 

Attachment II provides a description of project 
expenditures for each of the facility improvements 
described above. 

Of the total project costs of $16,027,610, the RPD is 
requesting a total of $12,791,110 for contractual services 
for construction costs at Harding Park (total project costs 
of $16,027,610 less DPW design and engineering costs of 
$2,015,500 less the $750,000 for golf course architectural 
design and engineering plans and less the $471,000 in 
permits and fees). As shown on Attachment II, these 
construction costs consist of the following individual 
projects: 

Construction Expenditures by Facility 

Golf Course Renovation $7,106,210 

New Clubhouse 4,074,000 

New Maintenance Facility 901,000 

New Driving Range 709.900 

Total Construction Expenditures $12,791, 1 10 

Attachment III provides cost estimates for the 
construction expenditures for the golf course renovation 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

106 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

totaling $7,106,210 and the new driving range totaling 
$709,900. According to Mr. Hoy, the construction 
estimates for the new clubhouse totaling $4,704,000 and 
the new maintenance facility totaling $901,000 are based 
on the conceptual design of the two facilities. Mr. Hoy 
reports that these estimates are consistent with the 
typical construction costs of such facilities. 

Comments: 1. The RZH Program grant of $5,016,627 requires a local 

match from two different sources, (a) a match by the RPD 
from non-State funding sources of 28.6 percent of the 
subject grant award of $5,016,627, or $1,433,322 and (b) a 
private match from non-State funding sources of 14.3 
percent of the subject grant award of $5,016,627, or 
$716,661, for a total required match of $2,149,983 from 
both RPD and a private matching source. 

However, according to Mr. Hoy, the RPD proposes to 
provide $716,661 more than RPD's required match of 
$1,433,322 for a matching fund amount from the RPD of 
$2,149,983. The RPD will request $2,149,983 in matching 
funds from the FY 2002-2003 Open Space Fund 1 . 

2. The required private match of $716,661 would be 
provided by the First Tee Program and consists of the 
development of golf course design and engineering plans 
for the Harding Park renovation project. The First Tee 
Program is a non-profit organization funded by the PGA, 
Ladies Professional Golf Association (LPGA), the United 
States Golf Association (USGA), other major golf 
organizations, as well as local charitable contributions, 
that provides golf programs designed to bring j^outh of all 
ethnic and socioeconomic backgrounds to the game of golf 
and will be located at Harding Park. Mr. Hoy reports that 
the design and engineering plans have an estimated value 
of $750,000, which is $33,339 greater than the required 
private match of $716,661 (see Comment No. 1). Mr. Hoy 
advises that the First Tee Program would provide these 
services as a gift to the City and that a resolution to 
accept this gift would be submitted to the Board of 
Supervisors under separate legislation. 



1 The Open Space Fund is a special fund established in the City Charter (Section 16.107). The 
revenue for the Open Space Fund is derived from Property Taxes at a rate of two and one-half cents 
($.025) for each one hundred dollars of assessed valuation. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

107 



\ 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



3. As noted in Comment No. 2, the First Tee Program is 
providing the golf course design and engineering plans for 
the Harding Park renovation project. Mr. Hoy reports 
that the First Tee Program has completed the golf course 
design and engineering plans for the Harding Park 
renovation project. Mr. Hoy advises that the RPD is ready 
to put out to bid for the construction contract for the 
Harding and Fleming golf courses. As shown in 
Attachment IV, provided by the RPD, the DPW design of 
the new Clubhouse and the new Maintenance Facility 
would begin in May of 2002. Mr. Hoy further advises that 
the RPD will conduct competitive bid processes for the 
construction of the proposed Harding Park renovation 
project is as follows: 

Construction Project Anticipated Bid Date 

Golf Course Renovation March of 2002 

New Clubhouse March of 2003 

New Maintenance Facility September of 2002 

New Driving Range June of 2002 

4. Attachment IV shows the timeline for the completion of 
various tasks for the Harding Park renovation project. 
According to Mr. Hoy, the anticipated completion dates 
for the Harding Park renovations are as follows: (a) golf 
course renovations, June of 2003; (b) clubhouse/cart barn 
parking lot in September of 2004; (c) maintenance facility 
in July of 2003; and, (d) driving range in July of 2003. 

5. According to Mr. Hoy, as a result of the proposed 
renovation project, Harding Park will be closed from 
approximately May 6, 2002 through approximately June 
1, 2003. Mr. Dan McKenna of the RPD advises that there 
are currently 17.96 FTE RPD staff assigned to Harding 
Park. Mr. McKenna reports that 6.0 FTE, consisting of 
5.0 FTE Gardeners and 1.0 FTE Park Section Supervisor, 
would remain at Harding Park during the renovation to 
oversee renovation of the golf courses and be trained by 
the construction contractor who would install new 
irrigation, drainage and other advanced infrastructure 
systems. Mr. McKenna further reports that the remaining 
11.96 FTEs, consisting of 7.0 FTE Gardeners, 1.0 FTE 
Truck Drivers, a .33 FTE Operating Engineer, a .33 FTE 
Plumber, a .33 FTE Automotive Machinist, a .33 FTE 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

108 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Pest Control Specialist, 1.65 FTE Tree Topper, a .33 FTE 
Tree Topper Supervisor I, a .33 FTE General Laborer and 
a .33 FTE Golf Program Director, would be assigned to 
the other four City-owned golf courses, including the 
Golden Gate Golf Course, the Lincoln Golf Course, the 
McLaren Golf Course and the Sharp Park Golf Course 
located in Pacifica, to accomplish needed deferred 
maintenance projects for the first six months of 
construction at Harding Park. These staff would then 
return to Harding Park during the last six months of 
construction to assist in the accomplishment of the final 
phases of the renovation of the proposed Harding Park 
renovation project. 

6. According to Ms. Jaci Fong of the RPD and Ms. Mary 
King-Gorky of the RPD, Harding Park's budgeted revenue 
for FY 2001-2002 is $1,632,000. This budgeted revenue is 
less than normal Harding Park revenues of 
approximately $2,000,000 annually because the RPD 
anticipated closing Harding Park for the renovation 
project during FY 2001-2002. Revenues at Harding Park 
will not be collected during the 13-month renovation 
project from May of 2002 to June of 2003. Operating 
expenditures that will be reduced during the renovation 
project include $628,800 for a management agreement 
with Principled Women Committed to Growth, LLC 
(PWCG) and $43,500 of maintenance materials and 
supplies or total reduced costs of $672,300. 

Ms. Fong also advises that until February of 2002, the 
RPD had a lease agreement with Mr. Ben Yamane to 
operate the restaurant at Harding Park. Ms. Fong reports 
that the lease expired on January 31, 2002 and Mr. 
Yamane chose not to continue the lease on a month-to- 
month basis until the closure of Harding Park in May of 
2002. Ms. Fong advises that the RPD realized 
approximately $32,000 a year under that lease. The 
restaurant of Harding Park is presently closed. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

109 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

The Budget Analyst estimates that the 13-month closure 
of Harding Park would result in a net loss of $959,700 as 
follows: 

Reduced Operating Revenues less Expenditure Savings during the 
13 Month Closure of Harding Park 



Golf Fees - Harding Park — Reduced Revenue 
Golf Fees - Fleming Park - Reduced Revenue 
Restaurant Lease Revenue - Reduced Revenue 

Subtotal - Reduced Revenue 
PWCG Management Agreement - Reduced Cost 
Materials and Supplies - Reduced Costs 

Subtotal - Expenditure Savings 

Net Loss 



($1,450,000) 

(150,000) 

(32.000) 

628,800 
43.500 



($1,632,000) 



672.300 
($959,700) 



Ms. King-Gorky states that the actual golf revenues from 
the operation of Harding Park during FY 2001-2002 will 
exceed budgeted revenues by approximately $370,000 
because it was assumed that Harding Park would be 
closed sooner for the renovation project. This would 
partially offset the $959,700 revenue loss, reducing it to 
$589,700. 

7. According to Ms. Fong, RPD is currently drafting a 
Request for Qualifications (RFQ) and a Request for 
Proposals (RFP) to select a manager for the pro shop and 
restaurant at Harding Park to begin after the renovated 
golf course is complete. Ms. Fong advises that RPD is 
drafting the RFQ and RFP at this time despite the fact 
that the clubhouse would not be completed until 2004 
because RPD would need a manager in place when the 
course re-opens in June of 2003 and such manager would 
assume the duties of managing the clubhouse and 
restaurant when the clubhouse is complete. 

8. Mr. McKenna advises that after the proposed project is 
completed, the new renovated Harding Park would 
require an additional 9.31 FTE personnel at an estimated 
annual cost, based on current salary rates of $638,754, 
including fringe benefits. These additional positions 
would maintain the grounds in an enhanced manner, 
beginning in the last three months of FY 2002-2003. Mr. 
McKenna anticipates funding these new positions from 
additional estimated revenues which will accrue to the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

110 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



proposed Golf Fund beginning in FY 2002-2003 (see File 
02-0197). The proposed additional 9.31 FTE personnel at 
an annual cost of $638,754 in Salaries and Fringe 
Benefits, based on current salary rates are as follows: 















Total 














Increased 










Total 


Fringe 


Personnel 




Title 


Salary 


FTE 


Salaries 


Benefits 


Costs 


3417 


Gardener 


$ 47,593 


5.0 


$ 237,962 


$ 59,491 


$ 297,453 


7355 


Truck Driver 


59,537 


2.0 


119,074 


29,768 


148,842 


7328 


Operating 
Engineer 


69,626 


0.66 


45,953 


11,488 


57,441 


7347 


Plumber 


74,592 


0.66 


49,231 


12,308 


61,539 


7313 


Automotive 
Machinist 


59,264 


0.66 


39,114 


9,778 


48,892 


3424 


Pest Control 
Specialist 


59,606 


0.33 
9.31 


19,670 


4,917 


24,587 
$ 638,754 



9. As noted in the Budget Analyst report on the proposed 
agreement with the Professional Golfer's Association 
(PGA) Tour (see File 02-0201) to make Harding Park the 
West Coast home of the PGA Tour Championship events, 
specific maintenance practices will be required to 
maintain Harding Park in accordance with PGA Tour 
standards. According to Mr. Hoy, such enhanced 
maintenance practices will require additional staffing 
which, based on current salary rates, would cost $638,754 
annually as noted above and an additional $100,000 
annual increase in materials and supplies, for total 
annual increased costs of $738,754, plus one-time 
equipment costs of an estimated $1,000,000. Such 
equipment may be lease-financed over three to five years. 
All of the increased expenditures are anticipated to be 
funded from increased golf revenues upon completion of 
the Harding Park Renovation project, according to Ms. 
Fong. 

10. The proposed resolution requires the Board of 
Supervisors to adopt findings on the proposed project 
pursuant to CEQA. Mr. Hoy reports that the Planning 
Department has reviewed the proposed project and issued 
a Negative Declaration, which found no significant 

BOARD OF SUPERVISORS 
BUDGET ANALYST 
11] 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

environmental impacts, although the Planning 
Department has prescribed a number of mitigation 
measures. According to Mr. Paul Maltzer of the Planning 
Department, the findings in the proposed resolution are 
consistent with the Planning Department's findings 
pursuant to CEQA. Mr. Maltzer notes, however, that the 
original Negative Declaration was completed on October 
30, 2000 rather than October 12, 2000. The proposed 
resolution should be therefore be amended to correctly 
reflect the date that the Negative Declaration was 
completed. 

11. Attachment V provided by the RPD, is the Grant 
Information Forms for the two grants which includes the 
Disability Access Checklist. 

Recommendations: 1. As noted in Comment No. 10, amend the proposed 

resolution to change the date on page 2, line 16 from 
October 12, 2000 to October 30, 2000. 

2. Approval of the proposed resolution, as amended, is a 
policy matter for the Board of Supervisors because of (a) 
the estimated net loss of one-time RPD operating 
revenues of $959,700 partially offset by surplus FY 2001- 
2002 Harding Park revenues of $370,000 which would 
reduce the one-time loss of operating revenues to 
$589,700 (see Comment No. 6), and (b) the increased 
annual costs of maintaining Harding Park of $738,754 
including $638,754 for personnel based on current salary 
rates, $100,000 for materials and supplies, and 
$1,000,000 in initial one-time costs for equipment to be 
incurred by the RPD (see Comment No. 9). The Budget 
Analyst notes however that the RPD anticipates to fully 
fund such increased costs from increased golf revenues 
once the Harding Park Renovation Project is completed. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 
112 



Harding and Fleming Golf Course Renovation 



Project Management 



FTE Title 



Class 
No. 



Hrly 
Rate 



Budget: 
FTE: 

Hrs 



S1 04,000 
0.52 



Totals 



0.02 Associate Civil Engineer 

0.44 Project Manager I 

0.04 Project Manager II 

0.02 Administrative Assistant 



0.52 



Construction Management 



FTE Title 



5206 
5504 
5506 
1446 



Class 
No. 



$83 
$97 
$101 
$54 



Hrly 

Rate 



48 
920 

80 
48 



$3,984 

$89,240 

$8,080 

$2,592 



1096 S103.896 



Budget 
FTE: 

Hrs 



S1 59,000 
0.97 

Totals 



0.11 Assistant Civil Engineer 5204 $70 

0.75 Associate Civil Engineer 5206 $83 

0.11 Administrative Assistant 1446 $54 



0.97 



240 S 16,800 

1560 $129,480 

220 $11,880 

2020 5158,160 



Attachment I 
^age 1 of 4 



Golf Course Renovation Summarv 




Project Management 


$104,000 


Construction Management 


159.000 


Design and Engineering 


85.000 


Subtotal 


5348,000 



Design and Engineering 

Site Engineering (Topography, Survey) 

Class Hrly 
FTE Title No. Rate 



Budget S85.000 
FTE: 0.50 



Hrs 



Totals 



0.06 Associate Civil Engineer 

0.06 Civil Engineer 

0.02 Senior Civil Engineer 

0.06 Civil Engineering Associate 

0.02 Administrative Assistant 



0.21 



5206 


$83 


120 


$9,960 


5208 


$96 


120 


S1 1,520 


5210 


$111 


40 


$4,440 


5364 


$62 


120 


$7,440 


1446 


$54 


40 


$2,160 




440 


535,520 



Electrical Engineering (Service and Site Power/Lighting) 
Class Hrly 
FTE Title No. Rate Hrs 



Totals 



0.03 Associate Electrical Engineer 

0.02 Electrical Engineer 

0.01 Senior Electrical Engineer 

0.01 Administrative Assistant 



0.07 



5238 


$83 


60 


$4,980 


5240 


$96 


40 


$3,840 


5242 


$111 


20 


$2,220 


1446 


$54 


20 


$1,080 




140 


$12,120 



Mechanical Engineering (Building Mechanical and Plumbing) 
Class Hrly 

FTE Title No. Rate Hrs Totals 

0.02 Assistant Mechanical Engine 
0.02 Mechanical Engineer 
0.01 Senior Mechanical Engineer 
0.02 Civil Engineering Associate 
0.01 Administrative Assistant 



0.08 



5252 


$70 


40 


$2,800 


5256 


$96 


40 


$3,840 


5258 


$111 


20 


$2,220 


5364 


$62 


40 


$2,480 


1446 


$54 


20 


$1,080 




160 


S12.420 



FTE 



Landscape Architecture (Landscape at Building and Parking) 

Class Hrly 
Title No. Rate Hrs Totals 



0.10 


Landscape Architect Associat 


5272 


$83 


200 


$16,600 


0.02 


Landscape Architect 


5274 


$96 


40 


$3,840 


0.01 


Senior Landscape Architect 


5275 


$111 


20 


$2,220 


0.02 


Administrative Assistant 


1446 


$54 


40 


$2,160 


0.14 








300 
1 T> 


524,820 



Harding Park Clubhouse/Parking Lot/Site Utilities 



Quhfmss Summarv 




5162,000 


Project Management 


Construction Management 




396.000 


Design and Engineering 




695.000 




Subtotal 


S1.253.000 



Attachment I 
Page 2 of 4 



Project Management 



FTE Title 



0.02 Project Manager I 

0.73 Project Manager II 

02 Civil Engineer Assoc 

02 Administrative Assistant 



079 



Design and Engineering 



Architecture (Building and Site Amenities) 

Class Hrly 
FTE Title No. Rate Hr 







Budget 


$162,000 


Construction Manaaement 




Budget 


$396,000 






FTE: 


0.79 










FTE: 


2.36 


Class 


Hrlv 


















No. 


Rate 


Hrs 


Totals 


FTE 


Title 


Class No. 


Hrly Rate 


Hrs 


Totals 


5504 


S97 


40 


S3.880 


0.11 


Assistant Civil Engine 


5204 


570 


240 


516,800 


5506 


S101 


1520 


51 53.520 


092 


Assoc Civil Engineer 


5206 


S83 


1912 


5158.696 


5364 


S62 


40 


52.480 


050 


Building Inspector 


6331 


S96 


1040 


599,840 


1446 


S54 


40 


S2.160 


19 


Senior Bldg. Inspecto 


6333 


5111 


400 


544.400 






1640 


5162,040 


0.39 
0.13 


Civil Engineering Assi 
Civil Engineering Ass 


5362 
5364 


556 
562 


820 
280 


545.920 






$17,360 










0.11 


Administrative Assist 


1446 


554 


240 


512,960 






Budget 


$695,000 


2.36 








4932 


$395,976 










FTE: 


4.39 















Site Engineering (Topography, Survey) 

Hrly 
FTE Title Class No. Rate 



Hrs 



Totals 



0.21 


Arch. Assoc. I 


5265 


S70 


440 


530,800 


0.04 


Assoc Civil Engineer 


5206 


$83 


80 


$6,640 


0.42 


Arch. Assoc. II 


5266 


583 


880 


573.040 


0.04 


Civil Engineer 


5208 


$96 


80 


$7,680 


0.23 


Architect 


5268 


596 


480 


546,080 


0.01 


Senior Civil Engineer 


5210 


$111 


20 


$2,220 


0.11 


Senior Architect 


5270 


5111 


240 


526.640 


04 


Civil Engineering Ass 


5364 


$62 


80 


$4,960 


0.32 


Arch. Assist. I 


5261 


556 


660 


536.960 


001 


Administrative Assist 


1446 


$54 


20 


$1,080 


0.19 


Arch. Assist. II 


5262 


562 


400 


524,800 


0.13 








280 


$22,580 


0.08 


Administrative Assistant 


1446 


554 


160 


58,640 














1.56 


Structural Engineering (Building 


and Site Structures) 


3260 


$246,960 




Hydraulic Engineering (Site Utilities) 
















Class 


Hrly 












Hrly 






FTE 


Title 


No. 


Rate 


Hrs 


Totals 


FTE 


Title 


Clas9 No. 


Rate 


Hrs 


Totals 


0.08 


Assistant Civil Engineer 


5204 


S70 


160 


511,200 


0.06 


Assistant Civil Engine 


5204 


$70 


120 


$8,400 


0.10 


Assoc Civil Engineer 


5206 


583 


200 


516,600 


0.11 


Assoc Civil Engineer 


5206 


$83 


240 


$19,920 


0.11 


Civil Engineer 


5208 


596 


240 


523.040 


04 


Civil Engineer 


5208 


$96 


80 


$7,680 


10 


Structural Engineer 


5218 


5111 


200 


522.200 


02 


Senior Civil Engineer 


5210 


$111 


40 


$4,440 


0.11 


Civil Engineering Assistant 


5362 


556 


240 


513.440 


0.11 


Civil Engineering Assi 


5362 


$56 


240 


$13,440 


0.08 


Civil Engineering Assoc 


5364 


562 


160 


$9,920 


0.06 


Civil Engineering Ass 


5364 


$62 


120 


$7,440 


004 


Administrative Assistant 


1446 


554 


80 


54.320 


002 


Administrative Assist 


1446 


$54 


40 


$2,160 


061 








1280 


$100,720 


0.42 








880 


$63,480 




Electrical Engineering (Building Power and Lighting) 








Mechanical Engineering (Building Mechanical and Plumbing) 






Class 


Hrly 












Hrly 






FTE 


Tide 


No. 


Rate 


Hrs 


Totals 


FTE 


Title 


Class No. 


Rate 


Hrs 


Totals 


06 


Assistant Electrical Engineer 


5236 


570 


120 


$8,400 


0.08 


Assistant Mechanical 


5252 


$70 


160 


$11,200 


0.11 


Assoc Electrical Engineer 


5238 


583 


240 


519.920 


11 


Assoc Mechanical En 


5254 


$83 


240 


$19,920 


008 


Electrical Engineer 


5240 


596 


160 


515.360 


08 


Mechanical Engineer 


5256 


$96 


160 


$15,360 


004 


Senior Electrical Engineer 


5242 


5111 


80 


58.880 


0.04 


Senior Mechanical En 


5258 


$111 


80 


$8,880 


0.11 


Civil Engineering Assistant 


5362 


556 


240 


513.440 


11 


Civil Engineering Assi 


5362 


$56 


240 


$13,440 


0.06 


Civil Engineering Assoc 


5364 


S62 


120 


57.440 


0.08 


Civil Engineering Ass 


5364 


$62 


160 


$9,920 


0.04 


Administrative Assistant 


1446 


554 


80 


54.320 


004 


Administrative Assist 


1446 


$54 


80 


$4,320 


0.50 








1040 


$77,760 


0.54 








1120 


$83,040 



FTE 



Landscape Architecture (Landscape at Building and Parking! 

Class Hrly 
Title No. Rate Hrs 



Traffic Engineering (Parking Lot, Grading) 
Hrly 



Totals 



FTE Title 



Class No. Rate 



Hrs 



Totals 



0.10 
0.08 

0.06 
002 
0.04 

002 
31 



Landscape Architect Assoc I 5262 570 200 

Landscape Architect Assoc II 5272 583 160 

Landscape Architect 5274 $96 120 

Senior Landscape Architect 5275 5111 40 

Civil Engineering Assoc 5364 562 80 

Administrative Assistant 1446 554 40 

640 

Prnviriert hu RPD 



514.000 

$13,280 

$11,520 

54.440 

54.960 

52.160 

$50,360 



0.08 Traffic Engineer 5230 

08 Senior Traffic Engine 5232 

0.15 Civil Engineering Ass 5364 

0.01 Administrative Assist 1446 



0.32 



$83 


160 


$13,280 


$96 


160 


$15,360 


$62 


320 


$19,840 


$54 


24 


$1,296 




664 


$49,776 



Project Management 



FTE Title 



Harding Park Maint. Facility/Parking Lot/Site Utilities 
Budget $27,000 

FTE: 0.14 

Class Hrly 
No. Rate Hrs Totals 



Attachment I 
Page 3 of 4 



0.02 


Asst Civil Engineer 


5204 


S70 


40 


$2,800 


0.11 


Project Manager II 


5506 


$101 


220 


$22,220 


002 


Administrative Assistant 
TOTAL: 

•uction Manaaement 


1446 


$54 


40 
300 

Budget 


S2.160 


0.14 


$27,180 


Const 


$103,000 










FTE: 


0.57 






Class 


Hrly 






FTE 


Title 


No. 


Rate 


Hrs 


Totals 


0.04 


Asst Civil Engineer 


5204 


$70 


80 


S5.600 


0.11 


Assoc. Civil Engineer 


5206 


$83 


240 


S19.920 


0.25 


Building Inspector 


6331 


$96 


520 


S49.920 


0.06 


Senior Bldg. Inspector 


6333 


$111 


120 


$13,320 


0.08 


Civil Engineering Assoc. 


5364 


$62 


160 


$9,920 


0.O4 


Administrative Asst 
i and Enaineerinq 


1446 


$54 


80 
1200 

Budget 


$4,320 


0.57 


$103,000 


Desiar 


$142,000 










FTE: 


0.89 



Maintenance Facility Summarv 




Project Management 


$27,000 


Construction Management 


103.000 


Design and Engineering 


142.000 


$272,000 



Architecture (Building and Site Amenities) 

Class Hrly 
FTE Title No. Rate 



Traffic Engineenng (Parking Lot, Grading) 

Class 
Title No. Hrlv Rate 



0.04 


Architect Assoc. I 


5265 


$70 


80 


S5.600 


02 


Traffic Engineer 


5230 


$83 


40 


$3,320 


0.02 


Architect Assoc. II 


5266 


$83 


40 


$3,320 


0.01 


Senior Traffic Engine 


5232 


$96 


20 


$1,920 


0.06 


Architect 


5268 


$96 


120 


$11,520 


0.06 


Civil Engineering Ass 


5364 


$62 


120 


$7,440 


0.02 


Senior Architect 


5270 


$111 


40 


$4,440 


01 


Administrative Asst 


1446 


$54 


20 


$1,080 


0.04 
0.02 


Architect Assist. I 
Architect Assist. II 


5261 
5262 


$56 
$62 


80 
40 


$4,480 
$2,480 


0.10 








200 


$13,760 




0.01 


Administrative Asst 1446 $54 20 

420 

Structural Engineenng (Building (Slab Only) and Site Struc 
Class Hrly 


$1,080 
$32,920 




Landscape Architecture (Landscape at Building and Pa 
Class 




0.20 




tures) 


rking) 


FTE 


Title 


No. 


Rate 


Hrs 


Totals 


FTE 


Title 


No. 


Hrly Rate 


Hrs 


Totals 


0.04 


Asst Civil Engineer 


5204 


$70 


80 


$5,600 


0.02 


Landscape Architect 


5262 


$70 


40 


$2,800 


0.02 


Assoc. Civil Engineer 


5206 


$83 


40 


$3,320 


0.04 


Landscape Architect 


5272 


$83 


80 


$6,640 


0.01 


Civil Engineer 


5208 


$96 


20 


$1,920 


0.02 


Landscape Architect 


5274 


$96 


40 


$3,840 


0.01 


Structural Engineer 


5210 


$111 


20 


$2,220 


001 


Senior Landscape Ar 


5275 


$111 


20 


$2,220 


0.O1 


Administrative Asst 


1446 


S54 


20 


$1,080 


002 


Civil Engineering Ass 


5364 


$62 


40 


$2,480 


0.09 


Hydraulic Engineering (Site Utilities) 
Class 


Hrlv 


180 


$14,140 


001 
0.11 


Administrative Asst 1446 S54 20 

240 

Mechanical Engineering (Building Mechanical and Plun 
Class 


$1,080 




$19,060 


ibing) 


FTE 


Title 


No. 


Rate 


Hrs 


Totals 


FTE 


Title 


No. 


Hrly Rate 


Hrs 


Totals 


0.02 


Asst Civil Engineer 


5204 


$70 


40 


$2,800 


002 


Asst Mechanical Engi 


5252 


$70 


40 


$2,800 


004 


Assoc. Civil Engineer 


5206 


$83 


80 


$6,640 


0.04 


Assoc. Mechanical E 


5254 


$83 


80 


$6,640 


0.02 


Civil Engineer 


5208 


$96 


40 


$3,840 


0.02 


Mechanical Engineer 


5256 


$96 


40 


$3,840 


0.01 


Senior Civil Engineer 


5210 


$111 


20 


$2,220 


0.01 


Senior Mechanical En 


5258 


$111 


20 


$2,220 


0.04 


Civil Engineering Asst 


5362 


$56 


80 


$4,480 


002 


Civil Engineenng Asst 


5362 


$56 


40 


$2,240 


002 


Civil Engineering Assoc. 


5364 


$62 


40 


$2,480 


0.01 


Civil Engineering Ass 


5364 


$62 


20 


$1,240 


0.01 


Administrative Asst 


1446 


S54 


20 


S1.080 


0.01 


Administrative Asst 


1446 


$54 


20 


$1,080 


15 








320 


$23,540 


0.12 








260 


$20,060 



Electncal Engineering (Service and Site Power/Lighting) 
Class Hrly 

FTE Title No. Rate Hrs 

0.04 Assoc. Electncal Engineer 5238 

0.02 Electrical Engineer 

0.01 Senior Electrical Engineer 5242 

0.02 Civil Engineering Asst 

0.02 Civil Engineering Assoc 

001 Administrative Asst 

0.11 



5238 


$83 


80 


$6,640 


5240 


$96 


40 


$3,840 


5242 


$111 


20 


$2,220 


5362 


$56 


40 


$2,240 


5364 


$62 


40 


$2,480 


1446 


$54 


20 


S1.080 




240 


S18.500 



Provided by RPD 



115 



Driving Range 



Attachment I 
Page 4 of 4 



Project Management 



FTE Title 



0.04 Assistant Civil Engineer 
0.08 Project Manager II 
0.02 Administrative Assistant 



0.13 



Construction Management 



FTE Title 



04 Assistant Civil Engineer 

0.25 Associate Civil Engineer 

0.02 Building Inspector 

0.11 Civil Engineering Associate 

0.01 Administrative Assistant 



0.43 



Design and Engineering 

Architecture (Building and Site Amenities) 

Class Hrly 
FTE Title No. Rate 







Budget 


$24,000 






FTE: 


0.13 


Class 


Hrlv 






No. 


Rate 


Hrs 


Totals 


5204 


S70 


80 


$5,600 


5506 


S101 


160 


$16,160 


1446 


S54 


40 


$2,160 




280 
Budget 


S23.920 




$68,500 






FTE: 


0.43 


Class 


Hrlv 






No. 


Rate 


Hrs 


Totals 


5204 


S70 


80 


55.600 


5206 


$83 


520 


$43,160 


6331 


S96 


40 


$3,840 


5364 


$62 


240 


$14,880 


1446 


$54 


20 


$1,080 




900 
Budget 


$68,560 




$50,000 






FTE: 


0.29 



0.04 


Arch. Assoc. I 


5265 


$70 


80 


$5,600 


0.02 


Architect 


5268 


$96 


40 


$3,840 


0.01 


Senior Architect 


5270 


$111 


20 


$2,220 


0.02 


Arch. Assist. II 


5262 


S62 


40 


$2,480 


0.01 


Administrative Assistant 


1446 


$54 


16 


$864 


0.09 








196 


$15,004 



Structural Engineering (Building (Slab Only) and Site Structures) 
Class Hrly 
FTE Title No. Rate Hrs 

0.02 Associate Civil Engineer 
0.01 Civil Engineer 
0.01 Structural Engineer 
0.01 Administrative Assistant 



0.05 



5206 


583 


40 


$3,320 


5208 


S96 


20 


$1,920 


5210 


$111 


20 


$2,220 


1446 


$54 


20 


$1,080 




100 


58,540 



Landscape Architecture (Landscape at Building and Parking) 
Class Hrly 

FTE Title No. Rate Hrs 

04 Landscape Architect Associate I 
0.02 Landscape Architect 
0.01 Senior Landscape Architect 
0.01 Administrative Assistant 



0.07 



5272 


$83 


80 


56.640 


5274 


$96 


40 


53.840 


5275 


$111 


20 


$2,220 


1446 


$54 


16 


5864 




156 


$13,564 



Driving Range Summary 

Project Management $24,000 

Construction Management 68,500 

Design and Engineering 50.000 

Subtotal $142,500 



DPW Summary 




Golf Course Renovation 


$348,000 


New Clubhouse 


1.253,000 


New Maintenance Facility 


272,000 


New Driving Range 


142.500 


Total DPW Services 


$2,015,500 



Electrical Engineenng (Service and Site Power/Lighting) 
Class Hrly 

FTE Title No. Rate Hr 

0.02 Associate Electrical Engineer 
0.02 Electrical Engineer 
0.01 Senior Electrical Engineer 
02 Civil Engineering Associate 
01 Administrative Assistant 



008 



5238 


583 


40 


S3. 320 


5240 


$96 


40 


S3.840 


5242 


5111 


20 


S2.220 


5364 


$62 


40 


$2,480 


1446 


$54 


20 


$1,080 




160 


S1 2.940 



Provided by RPD 



116 



Attachment II 
Page 1 of 5 



Accept and Expend Grant Resolution - Budget Summary | 

Title: Harding Park Projects, funded by: 

California State Proposition 12 (March 2000) - Per Capita Allocation, and 

Roberti Z'berg Harris Block Grant Program 

Gift from the First Tee Program 

Open Space Funds (Local Property Tax Assessment - March 2000, Prop. C) 



Amount: The Harding and Fleming Golf Course Renovation Project (collectively 

described as the Harding Park Projects) will consist of four separate projects as 
detailed below. The total cost of the four publicly funded projects is $1 6,027,61 0. 



1 . Course Renovation 

2. Clubhouse Renovation 

3. Maintenance Facility 

4. Ranae Renovation 



58,419,210 

5,512,000 

1,214,000 

882.400 



Total 



$16,027,610 



Source of 
Funds: 



The source of funds is California State Proposition 12, passed by the voters of 
California in March of 2000. The proposed Board of Supervisors resolution 
authorizes the Department to apply for the available State grant monies and to 
accept and expend the monies on the Project and, to the extent the amount of 
funds exceed the costs of the Project, for other as yet unspecified projects. The 
resolution also makes necessary CEQA and General Plan consistency findings 
related to the Project. 



Per Capita Allocation 
Roberti Z'berg Harris Block Grant 
Matching Funds (Gift from First Tee) 
Matching Funds (Open Space Funds) 



$ 8,111,000 

5,016,627 

750,000 

2,149.983 



Total 



$16,027,610 



Attachment 1 1 
Page 2 ot 5~~ 
Accept and Expend Grant Resolution - Budget Summary page 2 of 5 

Need and 

Purpose: 1. Harding and Fleming Golf Course Renovations 

The proposed project would renovate and upgrade the two existing golf courses 
at Harding Park, a triangular area of land that extends into Lake Merced, in the 
southwestern corner of San Francisco. The project would remove and replace 
the existing grasses that cover the tees, fairways, greens, and roughs of both 
the 18-hole Harding course and the 9-hole Fleming course. At the Harding 
course, the project would re-align the 13 th fairway and green; relocate the 18 th 
green; and re-grade and shape portions of other holes to modify the existing 
course topography, add or relocate sand traps, tees, and greens; and improve 
course payability and drainage. The alignment of the existing nine-hole Fleming 
course would remain the same as at present although this course would also be 
improved with new grasses and minor ground reshaping. The project will install 
new im'gation equipment in both courses. Both courses would be closed for the 
duration of an approximate 12-month construction period. No work is planned 
for areas designated as wetlands. 

Project Budget 

The proposed budget for the Course Renovations project is as follows: 

Project Cost $8,419,210 

Construction 7,106,210 

Permits and Fees* 21 5,000 ' 

Project Management 104,000 

Design and Engineering (Gift)** 750,000 

Design and Engineering (City Forces)** 85,000 

Construction Manapement 159,000 

TOTAL $8,419,210 

'Although Permits and Fees vary by project need, they include costs to other 
City Agencies such as: DBI and DCP for permitting and plan check costs; DPW 
for street use permits; PUC for water and electrical service connections; DPT for 
review of traffic impact and routing; DPH for monitoring of hazardous material 
removal and contamination of groundwater. 

"Design and engineering services for the course design are provided by the 
PGA tour under a private contract to the First Tee Program. These services will 
be a portion of a future gift to the City and County of San Francisco. The cost of 
those services is estimated at $750,000. The Design services provided by 
CCSF staff for the project consist of water and electrical service design for the 
course and stub outs for service to the Clubhouse and other buildings built 
under separate contracts. 

Detailed costs for in-house labor and consulting contracts are attached on 
following sheets. 



118 



Attachment II 

Page 3 of 5 
Accept and Expend Grant Resolution - Budget Summary page 3 of 5 



Need and 

Purpose: 2. Clubhouse Renovation 

This project would demolish existing buildings (except the existing cart barn) 
and construct replacement structures. A new clubhouse would be built south 
and west of the existing clubhouse location. The clubhouse would include a Pro 
Shop, Dining Facility, Administrative Offices and Restrooms. New site utilities 
would be provided for the clubhouse. The project would also demolish and 
replace the existing parking lots, generally in the same location as the existing 
main lot. The project would increase the number of on-site parking spaces by 
about 50, and would include lighting in the parking lot. 

The new clubhouse would be constructed under a separate contract from the 
course renovation and completed on a different schedule. Temporary facilities 
will be provided following course renovation and during building construction to 
ensure play resumes as scheduled. 



Project Budget 

The proposed budget for the Clubhouse Renovation Project is as follows: 

Project Cost $5,51 2,000 

Construction 4,074,000 

Permits and Fees* 185,000 

Project Management 162,000 

Design and Engineering 695,000 

Construction Management 396,000 

TOTAL $5,512,000 

*Although Permits and Fees vary by project need, they include costs to other 
City Agencies such as: DBI and DCP for permitting and plan check costs; DPW 
for street use permits; PUC for water and electrical service connections; DPT for 
review of traffic impact and routing; DPH for monitoring of hazardous material 
removal and contamination of groundwater. 

Detailed costs for in-house labor and consulting contracts are attached on 
following sheets. 



119 



Attachment n 
Page A of 5 
Accept and Expend Grant Resolution - Budget Summary page 4 of 5 

Need and 

Purpose: 3. Maintenance Facility 

A new maintenance facility would be built on the southeastern portion of the site 
with access from Lake Merced Boulevard. The maintenance facility would 
replace the existing facility and be built as quickly as possible to allow for 
maintenance of the renovated course scheduled for completion in July of 2003. 
The facility would include parking for maintenance equipment, vehicles and staff 
and include areas for fertilizer, landscape materials and agronomic supplies. 
The facility will also provide a vehicle wash-down area to prevent fertilizers from 
migrating to nearby Lake Merced. 

The need for a quick delivery of the building requires the maintenance facility be 
constructed under a separate contract from either the course renovation or 
clubhouse and completed on a different schedule. The existing maintenance 
facility will remain in operation until the new building is complete to ensure 
maintenance of the course continues as scheduled. 

Project Budget 

The proposed budget for the Maintenance Facility project is as follows: 

Project Cost $1,214,000 

Construction 901,000 

Permits and Fees* 41,000 

Project Management 27,000 

Design and Engineering 142,000 

Construction Management 103,000 

TOTAL $1,214,000 

'Although Permits and Fees vary by project need, they include costs to other 
City Agencies such as: DBI and DCP for permitting and plan check costs; DPW 
for street use permits; PUC for water and electrical service connections; DPT for 
review of traffic impact and routing; DPH for monitoring of hazardous material 
removal and contamination of groundwater. 

Detailed costs for in-house labor and consulting contracts are attached on 
following sheets. 



120 



Attachment II 
Page 5 ot 5 
Accept and Expend Grant Resolution - Budget Summary page 5 of 5 



Need and 

Purpose: 4. Driving Range Renovation 



The Harding and Fleming Golf Course Renovation Project would construct a 
new driving range west of the proposed parking lot with 25 hitting stalls located 
on the ground level. The range would be built with artificial turf and include 
target greens, yardage markers and fencing. The artificial turf will significantly 
reduce maintenance and increase the life of equipment and practice balls. The 
turf would also allow for percolation of rainwater through the surface and into the 
ground water below, not effecting the level of Lake Merced. 

The project will be developed with minimal design work and contracted pursuant 
to the Administrative Code to a Contractor specializing in Driving Range 
Construction. The proposed budget for the Driving Range Renovation project is 
as follows: 

Project Cost $882,400 

Construction 709,900 

Permits and Fees* 30,000 

Project Management 24,000 

Design and Engineering 50,000 

Construction Management 68,500 

TOTAL $882,400 

*Although Permits and Fees vary by project need, they include costs to other 
City Agencies such as: DBI and DCP for permitting and plan check costs; DPW 
for street use permits; PUC for water and electrical service connections; DPT for 
review of traffic impact and routing; DPH for monitoring of hazardous material 
removal and contamination of groundwater. 

Detailed costs for in-house labor and consulting contracts are attached on 
following sheets. 



121 



Attach ment m 
Page 1 of 4 



Hardir 


ig Range - Engineer's Estimate 








Feb-02 


:.i--^r^[lTEIWPESeB.l.erJ(?NS5?^- •'■■:;■';■ . - ...<.:-;**£-■-■ >i5fc|QUANTIT 


UNI; 


UNF1BR16B 


TOT-ALsg 


Clearing 










A 


Clearing, removal and disposal of trees, brush, debris, etc. 


5.5 


AC 


3,000.00 


16,500 


B 


Stump Grinding 


54 


EA 


225 


12,150 


C 


Non-Selective Eradication of Turf 


5.5 


AC 


175 


963 


D 


Stripping of Thatch and Mat layer, ALLOWANCE 


5.5 


AC 


935 


5,143 


E 


Asphalt Removal and Disposal 


1000 


SF 


1.5 


1,500 


F 


Misc. Concrete Removal 


52 


CY 


40 


2,080 


G 


Clearing (Selective Clearing) 


5.5 


AC 


2,200.00 


12,100 


1 


Tree Protection Fencing 


1700 


LF 


0.75 


1,275 




SUBTOTAL 








51,710 
















Expected Bid Price (rounded) 








51,700 




Contingency 








5,200 
















SUBTOTAL CONSTRUCTION COST 








56,900 














Construction 










A 


Driving Range Landing Zone 


216,000 


SF 


1.25 


270,000 


B 


Driving Range Tee Line 


4,500 


SF 


10.00 


45,000 


C 


Target Greens (5) 


12,500 


SF 


7.50 


93,750 


D 


Putting Green 


3,000 


SF 


10.00 


30,000 


E 


Chipping Green 


3,000 


LF 


10.00 


30,000 


F 


Driving Range Fencing (60') 


1,740 


LF 


71.75 


124,845 




SUBTOTAL 








593,595 
















Expected Bid Price (rounded) 








593,600 




Contingency 








59,400 
















SUBTOTAL CONSTRUCTION COST 








653,000 




| TOTAL-CONSTRUCTION COST .'■ •• :-V<^\ ■■i'.'^;-,: . ■-'■^r>fU?^M^^§^^lS?'09j900 : 



122 



Attachment III 
Pa S e 2 of T 



Harding Engineer's Estimate 








Feb-02 


*&£§;*& 


ITEM/DESGRiPaONl^Sgr^^;:- ; -^^Wvtv-;"-'^™^ ~- 


QUANTITt; 


UNITS 


UNIT5RRICES 


TQTAEMW? 




General Requirements 










A 


Mobilization (not to exceed 2% of contract amount) 


1 


LS 


550,000.00 


550,000 




Performance Bond 


1 


LS 


127,800.00 


127,800 




SUBTOTAL 








677,800 




Clearing 










A 


Clearing, removal and disposal of trees, brush, debris, etc. 


5 AC 


3,000.00 


15,000 


B 


Stump Grinding 


250 


EA 


225 


56,250 


C 


Non-Selective Eradication of Turf 


138.24 


AC 


175 


24,192 


D 


Stripping of Thatch and Mat layer, ALLOWANCE 


100 


AC 


935 


93,500 


E 


Asphalt Cart Path Removal and Disposal 


6800 


LF 


3 


20,400 


F 


Concrete Cart Path Removal 


9200 


LF 


2.3 


21.160 


G 


Zone "C" Clearing (Selective Cleanng) 


10.15 


AC 


2,200.00 


22,330 


H 


Zone "C" Mulching 


10.15 


AC 


2.364.50 


24,000 


1 


Tree Protection Fencing 


30000 


LF 


0.75 


22,500 


J 


Memorial Bench (removal, storage and replacement, 7 items) 


1 


LS 


5,600.00 


5,600 




SUBTOTAL 








304,932 




Sediment and Erosion Control 










A 


Fiber roll 


1950 


LF 


6 


11,700 


B 


Silt Fence/ Fiber roll 


5850 


LF 


10 


58.500 


C 


Silt Fence/ Fiber roll with 10' wide hydroseeding band 


1950 


LF 


12 


23,400 




SUBTOTAL 








93,600 




Earthwork 










A 


Bulk Cuts, (estimate, 8950 cut, 1450 fill, 7500 export) 


1 


LS 


23,700.00 


23,700 


B 


Borrow/ Bury Pits, ALLOWANCE 


27000 


CY 


2.65 


71,550 


C 


Excavation/ Replacement of Nematic Soils, (estimate, 6500 cy) 


1 


LS 


34,450.00 


34,450 


D 


Cut/Fill price for additional work 


15400 


CY 


2.65 


40,810 




SUBTOTAL 








170,510 




Rough Shaping 










A 


Harding Park and (2) putting greens shaping 


1 


LS 


240,000.00 


240.000 


B 


Fleming Course shaping 


1 


LS 


90,000.00 


90,000 




SUBTOTAL 








330,000 




Course Drainage 










A 


4" PVC Pert. Pipe w/ Gravel and Wire (not shown) ALLOWANCE 


3,500 


LF 


5.25 


18,375 


B 


4" PVC Solid Pipe ALLOWANCE 


3,500 


LF 


4 


14,000 


C 


6" PVC Pert. Pipe w/ Gravel and Wire (not shown) ALLOWANCE 


3,500 


LF 


7.5 


26,250 


D 


6" PVC Solid Pipe ALLOWANCE 


3,500 


LF 


6 


21,000 


E 


8" PVC Solid Pipe ALLOWANCE 


1,000 


LF 


7.25 


7,250 


F 


8" Catch Basin w/ Pert. Riser w/ Cast Iron Grate ALLOWANCE 


10 


EA 


225 


2,250 


G 


18" Catch Basin w/ Pert. Riser w/ Cast Iron Grate ALLOWANCE 


10 


EA 


375 


3,750 


H 


PermaBasins Model PB1800 (in fways) ALLOWANCE 


10 


EA 


185 


1,850 


1 


PermaBasins Model PB2400 (in fways) ALLOWANCE 


10 


EA 


225 


2.250 


J 


Inspection Basin ALLOWANCE 


100 


EA 


350 


35,000 




SUBTOTAL 








131,975 




Irrigation 










A 


Irrigation System Complete 


1 


LS 


1,323,800.00 


1.323,800 




SUBTOTAL 








1,323.800 




Greens Construction (175,000 SF) 




A 


4" PVC Peri. Pipe w/ Gravel and Wire 


12,700 


LF 


525 


66.675 


B 


4" PVC Solid Pipe 


2750 


LF 


4 


11,000 


C 


6" PVC Solid Pipe 


3300 


LF 


6 


19,800 


D 


6" PVC Pert. Pipe w/ Gravel and Wire 


3,300 


LF 


7.5 


24,750 


E 


4" Gravel Layer 


175,000|SF 


0.72 


126.000 


F 


12" Compacted Greens mix — 


175. 000 [SF 


2.99 


523.250 


H 


30 mil Plastic Liner w/ Tracer Wire 


8,250|LF 


2 


16,500 


1 


Slice Valves and fittings 


60|EA 


145 


8,700 


J 


Jumbo Valve Boxes 


30 


EA 


85 


2.550 


K 


6" Valve Boxes 


60 


EA 


40 


2.400 


L 


6" Cam lock Adapter and fittings 


30|EA 


135 


4.050 



1 n "\ 



Attachment m~ 
Page f of" 4' 



\SUBTOTAL 








805,675 




Tee Construction 










A 


Championship Practice Tees Construction (1@2) 


20,000|SF 


1.05 


21,000 


B 


4" PVC Pert. Pipe w/ Gravel @ Wire (Championship Tees only) 


800|LF 


5.25 


4,200 


C 


4" Solid Pipe (Championship Tees Only) 


300 


LF 


4 


1,200 




SUBTOTAL 








26,400 




Bunker Construction 










A 


Sand and Installation , ALLOWANCE 


100,000 


SF 


0.95 


95,000 


B 


4" PVC Pert. Pipe w/ Gravel and Wire, ALLOWANCE 


4,000 


LF 


5.25 


21,000 


C 


4" Solid Pipe. ALLOWANCE 


1,000 


LF 


4 


4,000 




SUBTOTAL 








120,000 




Cleanup and Finish Grading 










A 


Clean up and Finish Grading: 2 putting greens, Harding Course 


1 


LS 


127.000.00 


127,000 


B 


Clean up and Finish Grading, Fleming Course 


1 


LS 


63,500.00 


63,500 




SUBTOTAL 








190,500 




Cart Paths (Concrete) 










A 


8' wide, ALLOWANCE 


18,000 


LF 


16 


288,000 


B 


10' wide, ALLOWANCE 


10,000 


LF 


19.65 


196,500 


C 


4" Concrete curbs, ALLOWANCE 


10,000 


LF 


3.7 


37,000 




SUBTOTAL 








521,500 




Grassing 










A 


Fairwavs. estimated 78 acres 










A1 


Spreading Soil Amendments 


78 


AC 


650 


50,700 


A2 


Pre-Plant Fertilization 


78 


AC 


300 


23,400 


A3 


Seeding of Fairways 


78 


AC 


1.265.00 


98,670 


A4 


Install Curlex 1 including staples 


435,600 


SF 


0.135 


58,806 


A5 


Crimped Straw 


68 


AC 


855 


58,140 


B 


Rouahs. estimated 46 acres 










B1 


Spreading Soil Amendments 


46 


AC 


650 


29,900 


B2 


Pre-Plant Fertilization 


46 


AC 


300 


13,800 


B3 


Seeding of Roughs 


46 


AC 


1.200.00 


55,200 


B4 


Install Curlex 1 including staples 


435,600 


SF 


0.135 


58,806 


B5 


Sodding of Roughs 


435,600 


SF 


0.32 


139,392 


B6 


Crimped Straw 


26 


AC 


855 


22,230 


c 


Greens 










C1 


Spreading Soil Amendments 


175,000 


SF 


0.009 


1,575 


C2 


Pre-Plant Fertilization 


175,000 


SF 


0.008 


1,400 


C3 


Seeding 


175,000 


SF 


0.035 


6,125 


D 


Ie.es 










D1 


Spreading Soil Amendments 


296,000 


SF 


0.015 


4,440 


D2 


Pre-Plant Fertilization 


296,000 


SF 


0.007 


2,072 


D3 


Seeding 


296,000 


SF 


0.029 


8,584 




SUBTOTAL 








633,240 




Sewer Work 










A 


Trench Support 


1 


LS 


20000 


20,000 


B 


Precast concrete Manhole - type A 


2 


EA 


4000 


8,000 


C 


1 2" diameter VCP pipe 


168 


LF 


140 


23,520 


D 


8" diameter VCP pipe 


1,114 


LF 


90 


100,260 


E 


Cleanouts 


3 


EA 


1000 


3,000 


F 


Post Construction TV 


1 


LS 


1000 


1,000 




SUBTOTAL 








155,780 




Electrical Work 










A 


Pull Box 


4 


EA 


450 


1.800 


B 


Schedule 80 Conduit w/ pull rope 


2.600 


LF 


25 


65,000 


C 


Stainless steel pedestal panel ^_- 


1 


EA 


2000 


2,000 




SUBTOTAL 








68.800 




Mechanical Water Line Work 










A 


DCDA Assembly (10") 


4 


LS 


18750 


75,000 


B 


4" copper pipe 


1.220 


LF 


31 


37,820 


c 


12" diameter ductile iron pipe 


5,000|LF 


54 


270.000 



Attachment Ill 
Page 4'- of '^ 



D 


6" diameter ducticle iron' pipe 


5,540 LF 


42 


232,680 




SUBTOTAL 








615,500 



SUBTOTAL: 



6,170,012 



Expected Bid Price (rounded) 

Contingency 

Other Construction Work 

Tree Removal Work (136 Trees w/ disposal) 

Hazardous Material Abatement (BCM Contract) 

Maintenance During Grow In (6 months) 



1 LS 

1 LS 
1 LS 



6,170,000 
617,000 

184000 184,000 

55000 55,000 

80210 80,210 



TOTApSONSTRUCTlONfCOSTt^ w 






^7,106,2101 



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MSP.-0B-2002 13: 13 



P. 18 



Grant Information Form 

File Number: 



Attachment y 
Page 1 of 4 



(Provided by Clerk of Board of Supervisors) 



Grant Information Form 
(Effective January 2000) 

Purpose: Accompanies proposed Board of Supervisors resolutions authorizing a department to 

accept and expend grant funds. 

The following describes the grant referred to in the accompanying resolution: 

1. Grant Title: Roberti-Z'berg Harris Urban Open Space and Recreation Program Block 
Grant 

2. Department: Recreation and Park Department 

3. Contact Person: Gary Hoy Telephone: (415) 581-2552 

4. Grant Approval Status (check one): 

[X] Approved by funding agency [ ] Not yet approved 

5. Amount of Grant Funding Approved or Applied for: $5,01 6,627 
6a. Watching Funds Required: 52,149,983 

b. Source(s) of matching funds (if applicable): FY 02-03 Open Space Fund 
7a. Grant Source Agency: California Department of Parks and Recreation 
b. Grant Pass-Through Agency (if applicable): n/a 

8. Proposed Grant Project Summary: Renovation of Harding Park Golf Course 

9. Grant Project Schedule, as allowed in approval documents, or as proposed: 

Start-Date: July 1, 2001 End-Date: March 1, 2009 

10. Number of new positions created and funded: none 

1 1 . If new positions are created, explain the disposition of employees once the grant ends? 
12a. Amount budgeted for contractual services: 

b. Will contractual services be put out to bid? yes 

c. If so. will contract services help to further the goals of the department's MBE/WBE 
requirements? yes 

d. Is this likely to be a one-time or ongoing request for contracting out? One-time 
13a. Does the budget include indirect costs? [ ] Yes [x] No 

b1. If yes. how much? 

b2. How was the amount calculated? 

c. If no, why are indirect costs not included? 

[ ] Not allowed by granting agency [X] To maximize use of grant funds on 

direct services 

[] Other (please explain): 
14. Any other significant grant requirements or comments: 



"Disability Access Checklist"* 

15. This Grant is intended for activities at (check all that apply): 

[ ] Existing Site(s) [ ] Existing Structure(s) 

[ ] Existing Program(s) or Service(s) [ j Rehabilitated Site(s) 

[ ] Rehabilitated Structure(s) [ ] New Program(s) or Service(s) 

[ ] New Site(s) [ ] New Structure(s) 



127 



m-08-2002 13=13 Attachment V .. . P " 13 

Page 'I of k 



1 6. The departmental ADA Coordinator and/or the Mayor's Office on Disability have reviewed the 
proposal and concluded that the project as proposed will be in compliance with the Americans 
with Disabilities Act and all other Federal, State and local access laws and regulations and will 
allow the full inclusion of persons with disabilities, or will require unreasonable hardship 
exceptions, as described in the comments section: 
Comments: n/a 



Departmental or Mayor's Office of Disability Reviewer: 



(Name) (Dale Reviewed) 

(Name) T\ f\ (Title) 

(Signature) 




128 



MAT -08-2002 13=17 



Attachment y 
Page 3 of 4' 



P. 03 



Grant Information Form 



File Number: 



(Provided by Clerk of Board of Supervisors) 



Grant Information Form 

(Effective January 2000) 

Purpose: Accompanies proposed Board of Supervisors resolutions authorizing a department to 

accept and expend grant funds. 

The following describes the grant referred to in the accompanying resolution: 



Telephone: (415) 531-2552 



1. Grant Title: Per Capita 

2. Department: Recreation and Park Department 

3. Contact Person: Gary Hoy 

4. Grant Approval Status (check one): 

fX] Approved by funding agency [ ] Not yet approved 

5. Amount of Grant Funding Approved or Applied for: $8,111,000 
6a. Matching Funds Required: S N/A 

b. Source(s) of matching funds (if applicable): 
7a. Grant Source Agency: California Department of Parks and Recreation 
b. Grant Pass-Through Agency (if applicable): n/a 

8. Proposed Grant Project Summary: Renovation of Harding Park Golf Course 

9. Grant Project Schedule, as allowed in approval documents, or as proposed: 



Start-Date: July 1,2000 



End-Date: March 1, 2008 



1 0. Number of new positions created and funded: 

1 1 . If new positions are created, explain the disposition of employees once the grant ends7 
12a. Amount budgeted for contractual services: 

b. Will contractual services be put out to bid? yes 

c. If so. will contract services help to further the goals of the department's MBE/WBE 
requirements? yes 

d. Is this likely to be a one-time or ongoing request for contracting out? One-time 
1 3a. Does the budget include indirect costs? [ ] Yes [x] No 

b1. If yes, how much? 

b2. How was the amount calculated? 

c. If no, why are indirect costs not included? 

[ ] Not allowed by granting agency [X] To maximize use of grant funds on 

direct services 

[ ] Other (please explain): 

14. Any other significant grant requirements or comments: 

"Disability Access Checklist*** 

15. This Grant is intended for activities at (check all that apply): 

[ ] Existing Site(s) [ ] Existing Structure(s) 

[ ] Existing Program(s) or Service(s) [ ] Rehabilitated Site(s) 

[ ] Rehabilitated Structure(s) [ j New Program(s) or Service(s) 

[ ] New Slte(s) [ ] New Structure(s) 



129 



\f .><-uo-^ut) J 13=1? 



P. 94 



Attachment V 
rage k ot 4 



16. The departmental ADA Coordinator and/or the Mayor's Office on Disability have reviewed the 
proposal and concluded that the project as proposed will be in compliance with the Americans 
with Disabilities Act and all other Federal, State and local access laws and regulations and will 
allow the full inclusion of persons with disabilities, or will require unreasonable hardship 
exceptions, as described in the comments section: 
Comments: n/a 

Departmental or Mayor's Office of Disability Reviewer: 



(Name) (Date Reviewed) 

(Nanie) [)( f\ (Title) 

(Signature) 




130 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Item 8 - File 02-0201 



Departments: 
Item: 



Purpose of the 
Agreement: 



Term of the 
Agreement: 



Right of Renewal: 

Amount Payable 
by the PGA: 



Recreation and Park Department (RPD) 

Resolution approving and authorizing a Master 
Tournament Agreement (Agreement) between the 
Professional Golfers' Association (PGA) Tour, Inc. and the 
City, acting by and through the RPD Commission, for the 
use of Harding Park Golf Course for the PGA Tour 
Championship events; adopting findings pursuant to the 
California Environment Quality Act; and adopting 
findings that such action is consistent with the City's 
General Plan and Eight Priority Policies of City Planning 
Code Section 101.1. 



The purpose of the proposed Agreement is to make 
Harding Park Golf Course, including Fleming Golf Course 
(Harding Park), the West Coast home of the PGA Tour 
Championship events. 



From the approval of the proposed Agreement until an 
expected termination date of December 31, 2012, but no 
later than December 31, 2015 (see Comment No. 1). 

Three, nine-year extensions (see Comment No. 6). 



Under the terms of the Agreement, the PGA would pay 
the RPD an up-front use fee of $250,000 for each PGA 
Tour Championship event held at Harding Golf Course. 
In addition, the PGA would pay the RPD from the PGAs 
net revenues from each Tour Championship event (a) up 
to an additional $130,000 to defray the City's costs 
related to each Tour Championship event in excess of the 
$250,000 use fee (see Comment No. 5); (b) up to $500,000 
to the local Chapter of the First Tee Program; (c) 
$250,000 to make improvements to the Harding Golf 
Course, Fleming Golf Course and the surrounding areas; 
and, (d) 50 percent of all remaining net revenues realized 
by the PGA from each Tour Championship event in the 
City. All of the above payments would be adjusted based 
on an amount equal to the cumulative increases in the 
Bay Area Consumer Price Index (CPI) from the date of 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

131 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

the subject proposed PGA Agreement, except for the 
payment to the City of the 50 percent of all remaining net 
revenues from the Tour Championship events. 

As stated in Attachment I, provided by Deputy City 
Attorney Michael Cohen, based on his discussions with 
the PGA, the profits from Tour Championship events vary 
widely, and the average net profit from the last three 
Tour Championship events was approximately $950,000. 
According to Mr. Cohen, if Tour Championship event net 
profit at Harding Park were also $950,000, under the 
terms of the proposed PGA Agreement, RPD would 
receive $380,000, including the $250,000 use fee and the 
$130,000 to defray additional costs of hosting the Tour 
Championship event. Mr. Cohen advises that the First 
Tee Program would receive $500,000 of the $950,000 in 
net profits under the terms of the subject proposed PGA 
Agreement and the remaining $70,000 ($950,000 less 
$380,000 less $500,000) would be retained by the PGA for 
charitable contributions to either the First Tee Program 
or the RPD. Therefore, according to Mr. Cohen, based on 
an average net profit of $950,000, there would be no 
additional net revenues for the PGA to share with the 
RPD. Mr. Cohen estimates that the PGA Tour 
Championship event would need to net more than 
$1,260,000 before the RPD would share in the 50 percent 
of the remaining net revenues from a Tour Championship 
event. 

The First Tee Program is a non-profit organization, which 
is funded by the PGA, Ladies Professional Golfers 
Association (LPGA), the United States Golfers 
Association (USGA), other major golf organizations, as 
well as local charitable contributions. The First Tee 
Program provides golf programs designed to bring youth 
of all ethnic and socioeconomic backgrounds to the game 
of golf. The First Tee Program would be located at 
Harding Park following completion of the proposed 
renovation project (see Comment 4). 

Description: The proposed resolution would approve the Master 

Tournament Agreement (Agreement) between the 
Professional Golfer's Association (PGA) and the RPD to 
make Harding Park the West Coast home of the PGA 
Tour Championship events. According to Mr. Cohen, the 
PGA also has an East Coast home located at East Lake 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

132 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Golf Course in Atlanta, Georgia and two Mid-West homes 
located at Southern Hills Golf Course in Tulsa, Oklahoma 
and Champions' Golf Course in Houston, Texas for the 
PGA Tour Championship events. The PGA would 
alternate holding the Tour Championship events between 
the East Coast, Mid- West and West Coast locations. Mr. 
Cohen advises that Fleming Golf Course would be used as 
a practice facility for the professional golfers participating 
in the Tour Championship event. According to Mr. 
Cohen, the PGA's obligation to hold Tour Championship 
events at Harding Park is dependent upon (a) the RPD 
completing the Harding Park renovation project (see File 
02-0286), (b) allowing the First Tee Program to be 
established at Harding Park and (c) the RPD successfully 
achieving certain course maintenance standards for 
Harding Park. 

Under the terms of the proposed Agreement, the PGA 
would hold a PGA Tour Championship event three times 
over a nine-year period commencing on January 1, 2006. 
Harding Park would be partially or completely closed to 
the public for the two-week period beginning four days 
before the start of the week-long Tour Championship 
event and ending on three days after the Tour 
Championship event is completed. Mr. Cohen advises 
that the Tour Championship event is typically held each 
year in late October or early November. 

Additionally, under the terms of the proposed Agreement, 
each time a Tour Championship event is held at Harding 
Park the RPD would enter into a separate Tournament 
Facilities Agreement with the PGA, which would define 
the specific terms and conditions of each Tour 
Championship event, including the exact dates that the 
Tour Championship event is to be held at Harding Park 
Golf Course. Mr. Cohen advises that such Tournament 
Facilities Agreements between the RPD and the PGA 
would not be subject to separate Board of Supervisors 
approval, unless the individual Tournament Facilities 
Agreement differs materially from the subject proposed 
PGA Master Tournament Agreement. 

The proposed resolution also adopts the findings that the 
proposed Harding Park renovation project (see File 02- 
0286) would be conducted pursuant to the California 

BOARD OF SUPERVISORS 

BUDGET ANALYST 
3 



\ 

Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Environmental Quality Act and that the Harding Park 
renovation project is consistent with the City's General 
Plan and the Eight Priority Policies of City Planning Code 
Section 101.1 

Comments: 1. According to Mr. Cohen, the proposed Agreement 

between RPD and the PGA would become effective upon 
Board of Supervisors approval but the nine-year period in 
which the PGA agrees to hold three Tour Championship 
events at Harding Golf Course commences on January 1, 
2006 because the PGA has already committed to hold its 
Tour Championship events at the PGA's East Coast home 
and the two Mid-West homes through 2005. Mr. Cohen 
advises that under the terms of the proposed Agreement, 
the PGA could hold any one of the three Tour 
Championship events at Harding Park at any time over 
the nine-year period, although the expectation is that 
Harding Park would host the Tour Championship event 
in years 2006, 2009 and 2012. The subject Agreement 
would terminate on December 31 of the year in which the 
third Tour Championship event is held at Harding Golf 
Course but no later than 2015, according to Mr. Cohen. 

2. Ms. Jaci Fong, Property Manager of RPD, advises that 
to her knowledge, the PGA selects Tour Championship 
sites based on different criteria, including the location of 
the golf course, the quality of the golf course layout and 
the condition of the golf course. 

3. As noted above, the PGA's obligation to hold Tour 
Championship events at Harding Park is dependent upon 

(a) the RPD completing the Harding Park renovation 
project at a total project cost of $16,027,610, which 
includes $12,791,110 for construction (see File 02-0286), 

(b) allowing the First Tee Program to be established at 
Harding Park and (c) the RPD successfully achieving 
certain course maintenance standards for Harding Park. 
As shown on Attachment II, provided by RPD, Ms. Fong 
advises that the only incremental capital improvement 
project costs associated with Harding Park serving as the 
West Coast home of the PGA Tour Championship event is 
the cost to the City of installing championship golf tees on 
the Harding Golf Course. Ms. Fong states that the cost 
estimate for the Championship Tees is approximately 
$26,400 of the total construction costs of $12,791,110. As 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

134 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

shown on Attachment II, Ms. Fong asserts that all other 
renovations proposed as part of the Harding Park 
renovation project would be made even if Harding Park 
were not the West Coast home of the PGA Tour. 
According to Ms. Fong, RPD would have proceeded with 
the proposed Harding Park renovation project even if 
Harding Park was not going to become the West Coast 
home of the PGA Tour Championship events. As shown 
in Attachment II, the total project cost of the proposed 
Harding Park renovation project is $16,027,610 (see File 
02-0286). 

4. According to Mr. Cohen, establishment of the First Tee 
Program at Harding Park includes the conversion of the 
existing restaurant structure into a classroom and the 
existing driving range into a practice facility for the First 
Tee Program. According to Ms. Fong, subject to future 
approval by the Board of Supervisors, the RPD 
anticipates entering into a lease agreement with the First 
Tee Program for the existing restaurant facility as a 
classroom facility and the existing driving range as a 
practice facility at Harding Park. Mr. Gary Hoy of RPD 
reports that the First Tee Program anticipates spending 
$750,000 in tenant improvements to convert the existing 
restaurant into a classroom facility for First Tee Program 
operations. The First Tee Program, Mr. Hoy reports, 
would also spend $850,000 to improve the existing driving 
range. The existing driving range would then be used 
exclusively by the First Tee Program, which is why the 
proposed Harding Park renovation project includes the 
construction of a new driving range. According to Mr. 
Cohen, these tenant improvements totaling $1,600,000 
are in addition to the total project costs of $16,027,610 for 
the Harding Park renovation project (see File 02-0286). 
Mr. Hoy advises that these improvements would coincide 
with the golf course construction at Harding Park and 
would be complete in June of 2003. Mr. Hoy states that 
the First Tee Golf Program is estimated to serve 400 
youth annually. 

5. Attachment III, provided by the RPD, is a list of the 
maintenance standards that Harding Park must meet in 
order for Harding Park to become the West Coast home of 
the PGA Tour. According to Mr. Dan McKenna, 
Superintendent of the Southern Division of RPD, the 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

135 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

"General Course Maintenance Operating Plan" in 
Attachment III outlines the standard maintenance 
practices that will be required for Harding Park once the 
proposed renovations are complete and represents sound 
golf course maintenance practices irrespective of the PGA 
Tour Championship. 

Mr. McKenna advises that these standard maintenance 
practices would require an additional 9.31 FTE personnel 
in the RPD to maintain the golf greens at the Harding 
Park Golf Course and Fleming Golf Course, beginning in 
the last three months of FY 2002-2003. Mr. McKenna 
anticipates funding these positions from the proposed Golf 
Fund revenues (see File 02-0197) beginning in FY 2002- 
2003. The proposed additional 9.31 FTE personnel are as 
follows: 

5.00 FTE 3417 Gardener 

2.00 FTE 7355 Truck Driver 

0.66 FTE 7328 Operating Engineer 

0.66 FTE 7347 Plumber 

0.66 FTE 7313 Automotive Machinist 

0.33 FTE 3424 Pest Control Specialist 

9.31 FTE 

The annual cost of these positions is $638,754, including 
fringe benefits, based on current salary rates. 
Additionally, Mr. McKenna advises that the annual 
materials and supplies costs for Harding and Fleming golf 
courses would increase from $50,000 in FY 2001-2002 to 
$150,000 in FY 2003-2004, an increase of $100,000 (see 
File 02-0286). 

Mr. McKenna further advises that the "Championship- 
Specific Course Preparation Plan" in Attachment III 
outlines the specific maintenance standards required 
during Tour Championship events that would be subject 
to reimbursement under the proposed Agreement. 

Ms. McKenna advises that the estimated additional 
maintenance costs per event associated with the Tour 
Championship -specific maintenance requirements is 
$365,000 per event. These costs would be reimbursed by 
the up to $380,000 in payments made by the PGA to RPD, 
including the $250,000 use fee and the reimbursement of 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

136 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



up to $130,000 for each Tour Championship event. 
According to Mr. McKenna, the costs of $365,000 per 
event include: (a) a total of $315,000 in overtime, 
including $267,750 in overtime for Gardeners and 
$47,250 in overtime for Truck Drivers to maintain the 
Harding and Fleming golf course greens for the period of 
six weeks prior to and during each Tour Championship 
event; and, (b) an additional $50,000 in materials and 
supplies for golf course maintenance when the City hosts 
the PGA Tour Championship event. Mr. McKenna 
advises that these cost estimates are based on current 
labor rates and current materials and supply costs. 

Ms. Fong advises that the revenue from the PGA for each 
Tour Championship event would be appropriated during 
the annual budget process during years in which the Tour 
Championship event is to be held at Harding Park. 

6. According to Mr. Cohen, the City and the PGA must 
mutually agree to exercise any one of the three, nine-year 
options to renew the subject PGA Master Tournament 
Agreement. 

7. As shown in Attachment II, the RPD estimates that 
the loss of revenue from the two-week closure of Harding 
Park, including both Harding and Fleming golf courses 
during the Tour Championship event would range from 
$148,500 to $168,500. In Attachment I, Mr. Cohen claims 
that the lost revenue from the two week closure of 
Harding and Fleming Golf Courses would be offset by 
increased annual revenues the City will receive from non- 
resident golfers as a result of the course's identification 
with the Tour Championship event, which is estimated to 
be $500,000 annually. 

8. The proposed resolution also authorizes the General 
Manager of the RPD to enter into any additions, 
amendments or other modifications to the Agreement 
that are in the City's best interest, but do not materially 
(a) decrease revenue to the City from the PGA; or, (b) 
increase the City's obligations or liabilities, in order to 
complete the terms of the proposed Agreement without 
subsequent Board of Supervisors approval. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

137 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

9. The proposed resolution also requires the Board of 
Supervisors to adopt findings on the proposed project 
pursuant to CEQA. Mr. Hoy reports that the Planning 
Department has reviewed the proposed project and issued 
a Negative Declaration, which found no significant 
environmental impacts, although the Planning 
Department has proscribed a number of mitigation 
measures. According to Mr. Paul Maltzer of the Planning 
Department, the findings in the proposed resolution are 
consistent with the Planning Department's findings 
pursuant to CEQA. Mr. Maltzer notes, however, that the 
original Negative Declaration was completed on October 
30, 2000 rather than October 12, 2000. The proposed 
resolution therefore, should be amended to correctly 
reflect the date that the Negative Declaration was 
completed. 

Recommendations: 1. As noted in Comment No. 9 above, amend the 

proposed resolution to change the date on page 3, line 2 
from October 12, 2000 to October 30, 2000. 

2. Approval of the proposed resolution, as amended, is a 
policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

138 



City and County of San Francisco 

<£2^5^ Dennis J. Herrera 
City Attorney 




Attachment I 

Office of the City attorney 
Michael S. Cohen 

Deputy City Attorney 

DIRECT Dial: (415) 554-4722 
EMaiii: Michael_Cohen@ci.sf.ca.us 



MEMORANDUM 
PRIVILEGED & CONFIDENTIAL 



TO: 


Maureen Singleton 


COPES: 


Jaci Fong 
Amy Brown 


FROM: 


Michael S. Cohen 
Deputy City Attorney 


DATE: 


March 20, 2002 


RE: 


Harding 



Please find below a summary of my conversations with the PGA TOUR regarding 
historic revenues: 

The PGA TOUR stated that profits from tournaments like the Tour Championship vary 
widely, depending on, among other things, the efforts of the host community, including local 
corporate sponsors, and its appeal as a tourist destination. One of the reasons that the TOUR is 
willing to make San Francisco the west-coast home for the Championship is that it believes San 
Francisco will be a very strong site. According to the PGA TOUR, net profits from the last three 
TOUR Championships that would be available for distribution to the City and the First Tec 
program under the Master Tournament Agreement averaged approximately $950,000, and that 
comparable recent events with strong local support have earned in excess of $5,000,000 in net 
profits available for distribution. 

Also, as we discussed, I have asked our consultants at ERA to calculate the direct 
financial benefit, in terms of increased non-resident greens fees, of hosting the PGA TOUR 
Championship. According to ERA, the City will be able to charge non-residents at least 25% 
more because of the course's identification (and resulting media coverage) as the "west-coast 
home" of the PGA TOUR Championship than if the course did not host the Championship. 
Assuming (as we have in our pro-formas) that historic levels of resident play are preserved and 
non-rosi dents are limited to 25,000 rounds per year (5,000 of which are offered at a discount to 
Bay Area residents, and 5,000 of which are offered at a premium for advance reservations 
directed at out-of-towners), the City would eam approximately $500,000 extra dollars from non- 
resident play each year (Sl,500,000 total each tournament cycle) because of the Championship. 
The subsidy this model creates is the reason the City can keep resident rates affordable and still 
fully repay the costs of restoring Harding Park. 



City Hall- 1 Dr. Carlton B. GoodlETt Place. Suits 234- San Francisco. Calipornia 94 102-4682 
Reception: (415)554-4700 ■ Facs,mil£: (415)554-4755 

139 



THTDI P r? 



City and County of San Francisco 



Recreation and Park Department 




ATTACHMENT II 
Page 1 of 3 



MEMORANDUM 



DATE: 



March 20, 2002 



TO: Maureen Singleton 

Katie Fitzpatrick 
Budget Analyst Office 



FROM: 



Jaci Fon? 



CC: 



RE: 



Elizabeth Goldstein 
Gary Hoy 
Dan McKenna 
Mary King-Gorky 
Amy Brown 
Michael Cohen 
Angela Gengler 

Harding Park and PGA TOUR Championship Master Agreement 



Here are our responses to your questions: 

1. Harding Park will be closed to public play on May 2, 2002 to begin the renovation of the 
Harding Park Golf Course and the Fleming Golf Course. Renovations of these two golf 
courses should be completed by June 1, 2003 for a total closure of approximately 12 
months. In addition, once the renovation has been completed, the PGA has agreed to 
make the Harding Park the west coast site of the PGA TOUR Championship once every 
three years beginning in 2006. 

2. Per Dan McKenna, once the renovations at Harding Park are complete, the material and 
supplies costs will increase by $100,000 annually, from 550,000 to $150,000 (in line with 
industry standards). The increased materials and supplies costs would be funded from the 
proposed Golf Fund and would be appropriated during the annual budget process. To meet 
industry standards, staff on the renovated courses will be increased by 9.3 1 FTEs. This 
staff will be paid from the revenues in the Golf Fund as well. The proformas for the 
project accounted for the increased staffing at the course. The parameters recommended 
for the green fees were set with these proformas in mind. 

3 . The PGA TOUR does not normally enter into a Master Agreement to establish a course as 
the home of the TOUR Championship. However, since the TOUR Championship is a key 



McLaren Lodge, Golden Gate Park 

501 Stanyan Street 

San Francisco, CA 94117-1898 



140 



FAX: (415)831-2099 
Phone: (415)831-2700 

Source: Recreation and Park Department 



ATTACHMENT II 

Page 2 of 3 

to the success of this project, we felt the Board of Supervisors and the Recreation and Park 
Commission would want to have some assurance that the TOUR Championship would 
actually be played at Harding. The TOUR has graciously complied with our request. 

4. The only additional construction cost associated with being the West Coast home of the 
PGA TOUR Championship for the proposed Harding Park renovation project is the cost 
of the Championship golf tees, which is estimated to cost 526,400 of the 512,791,110 in 
construction costs. Players in the TOUR Championship will actually be practicing on 
several of the fairways of the Fleming Course, not at either driving range. Anticipating the 
closure of the Mission Bay driving range, the new driving range is proposed for use by the 
public. The present driving range has a limited number of stalls, and cannot be lengthened 
without affecting the layout of the Fleming course. A good driving range is very 
profitable, and in this case adds to the economic viability of the project. All other 
renovations proposed as part of the Harding Park renovation project would have been 
completed even if Harding Park were not the West Coast home of the TOUR 
Championship. RPD would have conducted the proposed Harding Park renovation 
project even if Harding Park were not going to become the West Coast home of the PGA 
TOUR Championship. The total estimated cost of the Harding Park renovation project is 
516,027,610, which includes 512,791,1 10 in construction costs. 

5. Per Dan McKenna, our current costs estimates for hosting a TOUR Championship at 
5365,000, including 5315,000 in overtime costs for gardeners and truck drivers to 
maintain the golf greens for six weeks prior to the event and during the event and 550,000 
in materials and supplies. Dan McKenna advises that 85% or 5267,750 of the overtime 
would be expended on the gardener classification. These costs would need to be adjusted 
by the CPI for 2006, the fist year in which the TOUR Championship is likely to be held at 
Harding Park. These Championship-specific costs are subject to preparation plan is 
subject to reimbursement under the terms of the agreement and is part of the user fees that 
the PGA will pay the City for holding the Tour Championship. 

6. The Harding Park complex is our only golf facility which includes a driving range for 
teaching and practicing. The First Tee program is a proven youth golf program designed 
to make the game of golf affordable and accessible for children of varying economic and 
social backgrounds. The national office of the First Tee Program is funded and supported 
by the USGA, the LPGA and the PGA as well as other major golf organizations. Among 
other benefits, the First Tee provides access to discounts on apparel and equipment, for 
use by First Tee participants. The benefit to the City of a partnership with the First Tee 
Program is that it will allow us to greatly expand golf programs for youth without a 
commensurate increase in General Fund support. The Department will work with the local 
chapter of the First Tee Program to develop their program. Once the program is 
underway, we will work collaboratively with the First Tee to integrate our existing youth 
golf program. We will actively recruit youth into the First Tee program. Our directors will 
promote the program to youth and transport youth to the First Tee facility. In addition, 
the City will benefit from the proven Fust Tee curriculum that teaches "life skills" through 
golf; which can include the following components: 1 ) simple literacy as well as support 
for higher education, 2) community service, 3) mentoring, 4) technology and 5) speakers 
programs. The Department anticipates entering into a lease with the First Tee Program for 
the existing restaurant and existing driving range at Harding Park. The existing restaurant 
would be converted to a classroom facility and the existing driving range would be 
renovated for exclusive use bv the First Tee Prosram as a practice facilirv The costs of 



ATTACHMENT II 
Page 3 of 3 

those renovations will be borne by the First Tee Program and not the City. We anticipate 
that an agreement with the First Tee will be brought before the Board of Supervisors 
within the next six months. 

Please see the memo regarding PGA revenue information from previous PGA TOUR 
Championships from Michael Cohen. 

The revenue from the PGA would be appropriated through the annual budget process 
during tour years. 

In reference to lost revenue to the course from the TOUR Championship, the following 
analysis was done by Gene Krekorian of ERA and is reflected in our pro formas. The 
assumption is that the Tournament will result in a reduction of approximately 2,200 
rounds of play on Harding and 2,000 rounds of play on Fleming. The lost revenue 
associated with this play reduction is calculated as follows under Alternative Fee Structure 
No. I: 



Revenue 


Harding 


Fleming 


Green Fees 


S90,000 


$27,500 


Carts 


17,200 


2,200 


Merchandise (net of cost of 
goods sold) 


4,700 


1,400 


Food & Beverage (net of cost 
of goods sold) 


1,700 


800 


Driving Range Fees 


2,000 


1,000 


Total 


SI 15,600 


$32,900 



Thus, the estimated loss in revenue under Alternative Fee Structure No. I is $148,500. Under 
Alternative Fee Structure No. 6, the estimated loss in green fees would be $20,000 more. 
Since we have not yet determined the actual fee schedule, we are offering an estimate of the 
loss revenue in the range of $148,500 to $168,500. 

If the TOUR Championship does well, our direct revenue from the event will more than offset 
the City's loss in revenue and additional maintenance costs through the Base Tournament Fee, 
revenue sharing mechanisms and funding provided to the First Tee Program proposed in the 
PGA TOUR Championship Master Tournament Agreement. In addition, the PGA TOUR 
estimates the economic impact to the community at $30 to $40 million each time the 
Tournament is hosted. The loss in revenue is more than offset by the "free advertising" the 
course will receive since the PGA TOUR Championship is a prestigious televised event, and 
the fact that the association with the TOUR Championship is what will allow us to charge a 
premium to certain non-resident golfers on an ongoing basis, generating incremental revenue 
even in years when the TOUR is not played at Harding Park. (See TOUR Championship 
Revenue information from Michael Cohen.) 



142 



jp/13/2UU.i la.-Bd 4152218034 SF RECPARK PAGE 13 

Attachment III 
Fage i of 4 



EXHIBIT B 

Course Conditioning Plans 

Below are the general and Championship specific course conditioning guidelines for 
Harding Park. The guidelines are intended to assist the City in achieving Championship- 
caliber course conditions equivalent to other host venues for the Championship. Ultimate 
approval of course conditions remains at all times in the discretion of TOUR's Agronomy 
Department. 

A. General Course Maintenance Operating Plan Summary 

Following is the recommended weekly operating plan for the maintenance 
department at Harding Park Golf Courses to meet the RFP requirements and is 
subject to change based on site conditions and special requirements. 

37. Greens will be mowed daily (7 times) by riding type greens mowers if 
necessary during the growing season. Care should be taken to limit the use 

of riding greens mowers all the time as wear patterns will develop and 
disease can be tracked on to the greens by the tires of the mowers. Single, 
walking type machines are to be used in place of the riding mowers during 
preparations 3 to 5 months prior to the tournament or at other times as 
dictated by conditions, n. Height of cut will vary 5/32 to 1/8 inch 5/32 
inch to 1/8 inch or as conditions dictate. 

38. Tees will be moved on M,W,F (3 times) during flic growing season with 
triplex mowers where possible and walking mowers where excessive wear 

is a problem. Frequency will reduce during off season. Height of cut will 
vary l A to V* inch or as conditions dictate. 

39. Cups, tee placements, rope adjustments, ball washer service, course 
cleanup, ball mark repair, tee and fairway divot dressing and hand 
watering of greens and tees will be performed daily (7 times) or as needed. 

40. Traps will be raked and edges groomed daily (7 times) or as needed to 
accommodate play. Weeds, debris and stones will be removed as they 
appear. 

41. Fairways, approaches, green collars and intermediate roughs will be 
mowed on M,W,F (3 times) during the growing season and as necessary 
during the off season. Fairways will be mowed at 14 to Vs inch, collars at 
3/S inch and for the tournament a close roughs at 1 inch or as conditions 
dictate. 

42. Formal roughs will be continuously mowed to ensure a frequency of at 
least one complete mowing per week and trimmed as needed to maintain a 

S''>*gnitH£C.C>urripioiis'r.ip MgnMtf'bfding Pir'< Chirrp Toum Ag'^'-dcc 



143 



Attachment III 

1.5 to 2.5 inch cutting height or as conditions dictate. Natural °and" 
informal roughs will be maintained at icast at 4 inches or higher. 

44. Slopes of greens and tees will be mowed mice a week at 1.5 days per 
mow, or as needed to maintain a catting height of 1.5 to 2.5 inches or as 
conditions dictate. 



45. Spraying and fertilizing will be done so as to not expose golfers during 
play hours. It is advisable that One day shall be set aside per week to 
perform these applications or they be performed at night with minimal 
golfers present and the appropriate re-entry times will be observed. 

46. Irrigation repairs will be done as needed with a visual daily checkout of 
the system and a thorough analysis of the computer run data from the 
previous night. Adjustments to the program will be made only by trained 
and qualified personnel under the direction of the superintendent. 

47. Course improvements will be done as scheduled with emphasis on not 
interfering with play. All projects will be aimed at completion by 
Thursday of the current week. 

48. Aerifying and top-dressing shall be completed not less than two (2) times 
each year. Periodic light vericutting and top-dressings on greens and tees 
will be performed throughout the growing season as needed to maintain 
smoothness and spced. 

49. Irrigation will be done sparingly throughout the season to conserve water, 
prevent leaching and encourage good root development. 
Evaporranspiration rates will be calculated by an on-site weather station 
for use in determining the amount of precipitation to be applied. 

50. All grounds will be cleaned of paper and debris daily with special 
emphasis on the clubhouse and driving range area. Mowing shall be the 
same as the formal rough areas. 

51. All grounds will be monitored for water needs and treated accordinely on 
a daily basis. 

52. All beds will be weeded it least once per week. 

53. All walks will be edged as needed and curb lines will be trimmed when 
mowed. 

54. .All shrubs will be pruned for shape in Spring and Fall and maintained 
weekly as needed. 

55. All beds will be mulched where appropriate in Spring and maintained as 
required for color and weed control. 

56. All flower beds will be maintained with the appropriate floral material 
throughout the growing season. 

57. All ornamental trees except those on the golf courses will be fertilized 
with a liquid root feeding once in the Spring and once in the Fall. 

144 



r Abe 1 13 
Attachment III 
Page 3 of 4 



58. All ornamental trees wiH be pruned in the Spring and late Fall for dead 
material and shaping. 

59. All turf and plant material including Trees will be treated with pesticides as 
needed during the season according to IPM principles. 

60. All dead or dying ornamental plant material will be replaced as needed 
during the growing season. Material that has died in previous years will 

be replaced with appropriate trees and shrubs as practical. 

61. All bare areas of high visibility and main street shoulders will be seeded or 
sodded as practical in Spring and maintained as required. 

62. All sidewalks and parking areas will be kept free of ice and snow as 
required during the Winter months. 

63. All transplanted trees will be monitored and watered if necessary 
throughout the dry season. 

B. Championship-Specific Course Preparation Plan 

Following is the recommeDded golf course tournament conditioning plan for the week of the PGA 
TOUR CHAMPIONSHIP. Ultimately, all course conditions must meet with the approval of PGA 
TOUR Agronomy staff, in their discretion. Hie Golf Course Superintendent will work with the 
PGA TOUR Agronomy and Rules raff at various times of the year and during Advance Week to 
accomplish all tasks required to set up the golf course for Tournament Week, 10 include but not be 
limited to: 

• establishing die required frequency and cutting height for tees, fairways, approaches, roughs and 
intermediate roughs 

■ rolling, vertical grooming, topdressing, brushing, and establishing mowing heights and 

frequencies to meet the requested greens speed and smoothness 

• ensuring the appropriate depth and firmness of all sand bunkers and ensuring that the bunkers arc 
all free of contamination 

• filling and maintaining all divots on tees and fairways with requested material 

• repairing all ball marks on gTesns 

• accomplishing all spraying for disease control and necessary fertilization to avoid additional 
applications during Toumirr.ent Week 



$.' AjmXECClumpiorwhip MpnfiHarding Park Disss Tow Agmtdac 



U5 



£ '■ Attachment III 

Page 4 of 4 



• ensuring the irrigation system is to perfect working condition and establishing appropriate 

irrigation techniques for Tournament Week. 

Tt should be noted that approximately 1500-2000 additional sOff hours will be required 
during the final few weeks leading up to and during Tournament Week to fully prepare 
the course for the event 

The following is the recommended plan for golf course maintenance operations during 
Tournament Week, beginning on Monday and ending on Sunday or as needed in case of a playoff. 
The work schedule will require two shifts, AM and PM, to complete the appropriate tasks before 
and after scheduled play each day. 



146 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

Items 9 and 10 - Files 02-0198 and 02-0197 

Departments: Recreation and Park Department (RPD) 



Items: 



Description: 



Item 9 - File 02-0198: Ordinance amending Article XII 
of the San Francisco Park Code by adding Section 12.12 
thereto setting forth a revised fee structure for Harding 
Park and Fleming Golf Courses. 

Item 10 - File 02-0197: Ordinance amending Chapter 
10, Article XIII of the Administrative Code by adding 
Section 10.100-256 thereto, establishing the San 
Francisco Recreation and Park Golf Fund. 

Item 9 -File 02-0198: 

The proposed ordinance would authorize the Recreation 
and Park Commission (Commission) to establish a new- 
fee structure for greens fees at Harding Park and Fleming 
Golf Courses. The specific fees set by the Recreation and 
Park Commission would not be subject to approval by the 
Board of Supervisors, but would have to be within certain 
specific parameters set forth in the proposed ordinance as 
described below. The fees would be established by the 
Commission in the following manner, and subject to the 
conditions described below: 

1. Target Revenues . Greens fees would be set annually 
at such levels to cumulatively generate an average 
minimum of $4,278,000 in annual revenues in 2002 
dollars (i.e., subject to CPI adjustments in future 
years) at the Harding Park and Fleming Golf Courses 
in the first five fiscal years of operation following 
reopening of the Harding Park and Fleming Golf 
Courses after renovation ("Years 1-5"). The Target 
Revenue amount would be prorated if the Harding 
Park and Fleming Golf Courses reopen with less than 
a full fiscal year remaining in Year 1. In setting 
greens fees to achieve the Target Revenues, it would 
be assumed that legal residents of the City who hold 
current and valid cards issued for a fee by the 
Recreation and Park Department, identifying them as 
residents of the City, shall play 65 percent of total 
rounds played at Harding Park Golf Course, which 
represents historic levels of resident play, and that an 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



average of 76,560 rounds shall be played each full year 
at Harding Park Golf Course during Years 1-5 and an 
average of 64,600 rounds each full year at Fleming 
Golf Course during Years 1-5. 

2. Optional Discounts . Greens fees at Harding Park Golf 
Course may be discounted for weekday rounds played 
by either City residents or non-residents, for weekday 
or weekend rounds played by Resident junior or senior 
golfers, and for twilight rounds played by either City 
residents or non-residents. Greens fees may be 
discounted for certain non-residents who live within 
close geographic proximity to the Harding Park and 
Fleming Golf Courses or who play with Residents 
("Bay Area Residents"). If the Commission approves a 
discounted rate for Bay Area Residents, the 
Commission would set standards defining who shall 
qualify for such discounted rates and shall limit the 
number of rounds at that discounted rate for Bay Area 
Residents to no more than 5,000 rounds annually. 

3. Optional Premium Rates . In exchange for advance 
reserved tee times, non-residents may be charged 
premium rates at Harding Park Golf Course. 

4. Caps. The average cost per round of Resident greens 
fees at Harding Park Golf Course across any and all 
subcategories of Resident play (weekday, weekend, 
senior and junior) fees would not exceed $28 in Year 1, 
without consideration of Optional Discounts for junior 
or senior golfers. The average cost per round of non- 
resident greens fees at Harding Park Golf Course 
across any and all subcategories of non-resident play 
would not exceed $88 in Year 1. The average cost per 
round of Resident greens fees at Fleming Golf Course 
across any and all subcategories of Resident play 
(weekday, weekend, senior and junior) would not 
exceed $13 in Year 1. The average cost per round of 
non-resident greens fees at Fleming Golf Course across 
any and all subcategories of non-resident play 
(weekday and weekend) would not exceed $20 in Year 
1. 

5. Miscellaneous . Applicable weekend greens fee rates 
would be charged on Fridays, Saturdays and Sundays 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



8. Annual Increases . Upon the first day following the 
end of Year 1, regardless of whether Year 1 consisted 
of a full fiscal year or only a part thereof, and upon the 
first day of each fiscal 3 r ear thereafter, greens fees for 
San Francisco residents at the Harding and Fleming 
Golf Courses may, with the approval of the 
Commission, be adjusted according to changes in the 
Consumer Price Index. 

Item 10 -File 02-0197 

The proposed ordinance would amend the Administrative 
Code by adding Section 10.100-256 to establish the San 
Francisco Recreation and Park Golf Fund. The San 
Francisco Recreation and Park Golf Fund would be 
established as a Category Four Fund 1 to receive, effective 
July 1, 2002, all revenues derived from any City Golf 
Courses under the jurisdiction of the Recreation and Park 
Department. 

Under the proposed ordinance, all revenues derived from 
City Golf Courses, including Greens Fees and concession 
revenues, would be restricted to the following uses: 

1. Operation and maintenance of the Golf Courses 
pursuant to budgets for each Golf Course annually 
approved by the Recreation and Park Commission and 
the Board of Supervisors, including general and 
administrative costs, and utilities, provided that the 
Department would not cause the maintenance 
standards for the Harding Park Golf Course to exceed 
the Maintenance Standards for Harding Park set forth 
in the City's Master Tournament Agreement with the 
PGA (see Item 8, File 02-0201); 

2. An annual set aside within the Golf Fund of $250,000, 
increasing by the percentage change in the Consumer 
Price Index each year, beginning within twelve (12) 
months after Harding Park reopens after renovation 
(the "Project") and occurring every fiscal year 
thereafter, to be used exclusively for capital 



1 Under Administrative Code Section 10.100-1, a Category Four Fund: a) must receive appropriation 
approval by the Mayor and the Board of Supervisors; b) interest earnings shall accumulate to the 
Fund, and c) unexpended balances will be carried forward within the Fund. 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



and legal holidays. Applicable weekday rates apply on 
all other days. Greens fees for playing in 
tournaments, which are defined as a block of tee 
time(s) set aside for any group of 16 or more golfers, 
would be the same per tournament player as the 
greens fees charged to non-residents with advance 
reservations, if such a rate is set, and in any event 
would exceed the regular non-resident greens fees. 
Discount resident greens fees would not apply to 
tournament play by residents, who would pay the 
tournament rate set by the Commission without 
regard to Resident status. Weekend tournament 
greens fees would be greater than greens fees charged 
for weekday tournaments. 

6. Commission to Select Final Rate Structure; Citizens 
Advisory Committee . The Commission would select a 
final greens fees structure which meets the 
parameters set forth in this proposed ordinance. The 
Commission would appoint a citizens advisory 
committee consisting of five (5) members to 
recommend to the Commission a greens fees structure 
for the Harding Park and Fleming Golf Courses chosen 
from one of the alternative fee structures detailed in 
the Attachment to this report, or that otherwise meets 
the criteria set forth in the proposed ordinance. The 
Commission would take the committee's 
recommendation into consideration in reaching a final 
decision regarding a fee structure for the Harding 
Park and Fleming Golf Courses. The fee alternatives 
shown in the Attachment to this report were developed 
by RPD staff and their consultant, Economic Research 
Associates. 

7. Other Fees and Charges . The Commission would set 
all other fees charged at the Golf Courses, including, 
but not limited to, fees for motorized cart and pull cart 
usage, tournament fees, food and beverage charges, 
charges for driving range usage, reservation fees and 
cancellation fees, at levels comparable to those 
charged at golf courses of similar quality in the greater 
San Francisco Bay Area. 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



improvements and facilities maintenance projects at 
Harding Park; 

3. Payments to the Park, Recreation and Open Space 
Fund (Open Space Fund), as described in City Charter 
Section 16.107, on a schedule and in amounts 
sufficient to pay the capital portion of the Open Space 
Fund the full cost of the Harding Park renovation 
Project paid from the proceeds of applicable State 
grant programs and excluding any charitable 
donations, beginning upon the conclusion of the 
Project, plus to pay the Open Space Fund generally 
interest on such principal amount at an annual rate 
determined once a year by the Commission, provided 
that such interest rate would at least equal to the 
greater of (a) the City's cost of borrowing funds under 
the Open Space Fund if and to the extent it has at the 
time the Commission makes such determination 
outstanding bonded indebtedness under the fund or (b) 
one percent less than the Prime domestic commercial 
lending rate in effect at such time of Bank of America 
or such other major financial institution selected by 
City, compounded annually, within twenty-five (25) 
years. Further, in any year that the actual annual Net 
Cash Flow received by the Department from the 
operation of the Harding Park and Fleming Golf 
Courses exceeds the projected Net Cash Flow for that 
3 r ear ("Bonus Profit") 25 percent of that amount would 
be applied to accelerate reimbursement to the Open 
Space Fund for the costs funded by the State grants 
and matching funds from the Open Space Fund of the 
Harding Park renovation project, and provided further 
that in any year in which the Bonus Profit exceeds 
One Million Dollars ($1,000,000), fifty percent (50%) of 
such Bonus Profit would be applied to accelerate 
repayment of the Open Space Fund for the costs 
funded by the State grants and matching funds from 
the Open Space Fund; 

4. Improvements, renovations and capital expenditures 
at any of the Golf Courses upon approval of any such 
expenditures by the Recreation and Park Commission; 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 

5. Payment of annual debt service of principal and 
interest thereupon for any debt-funded improvements 
and renovations at any of the Golf Courses upon 
necessary approvals by the Recreation and Park 
Commission and the Board of Supervisors 

6. Capital improvements to the park and recreation 
areas contiguous to Harding Park and under the 
Department's jurisdiction, pursuant to plans approved 
by the Recreation and Park Commission. Upon future 
renovations of Golf Courses other than Harding Park, 
additional annual set asides for capital improvements 
would be established for recreation areas or parks 
under the Department's jurisdiction contiguous to each 
such improved Golf Course. 

7. Administration of Fund. All expenditures from the 
San Francisco Recreation and Park Golf Fund are 
subject to approval of the Recreation and Park 
Commission and appropriation approval by the Board 
of Supervisors. 

Comments: 1. The purpose of the "Target Revenue" amount set 

initially at $4,278,000 annually in the proposed Golf Fee 
ordinance (File 02-0198), is to provide sufficient revenue 
to operate and maintain Harding and Fleming Golf 
Courses upon completion of the Harding Park renovation, 
as described in File 02-0286, and to repay the Open Space 
Fund for the $13,127,627 amount of State grant funds 
used for the Harding Park renovation project plus 
$2,149,983 in matching funds from the Open Space Fund, 
for a total principal amount of $15,277,610, plus interest. 
The interest rate charged to repay the principal amount 
to the Open Space Fund would be determined annually by 
the Commission, and the payments would be amortized 
over a period of 25 years, subject to acceleration if the 
City earns "Bonus Profit". The proposed Golf Fund would 
reimburse the Open Space Fund because the original plan 
to renovate Harding Park would have required the 
issuance of lease revenue bonds according to Ms. 
Elizabeth Goldstein, General Manager of RPD. However, 
the use of available State grant funds for this purpose is a 
more efficient use of available funds,. The use of lease 
revenue bond proceeds to fund the renovation project 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



would have required the issuance of such bonds in a par 
amount that included bond issuance costs and capitalized 
interest in addition to the total renovation project cost of 
$16,027,610. According to Ms. Monique Moyer, Director of 
the Mayor's Office of Public Finance, a total lease revenue 
bond issuance of approximately $21.0 million would have 
been required to fund the renovation project costs, 
required issuance costs and capitalized interest for the 
Harding Park renovation project. 

Ms. Goldstein adds that the use of State grant funds to 
fund the Harding Park renovation is consistent with the 
RPD's long range capital improvement plan, since the 
Harding Park renovation has always been part of the long 
range plan. 

The Target Revenues of $4,278,000 annually is based on 
projected revenues, expenditures and net income 
prepared for the RPD by Economic Research Associates. 
These projections result in total net revenue to the 
proposed Golf Fund of between $1.5 million and $5.3 
million over Years 1 through 5 of Harding Park operation 
following completion of the proposed Harding Park 
renovation project, depending on the fee structure 
alternative selected by the Recreation and Park 
Commission. The Budget Analyst has reviewed the pro 
forma statements prepared by ERA and found them to be 
reasonable given the assumptions used to prepare the 
projections. However, the projected revenues are based on 
a continuation of at least 35 percent non-resident play of 
the Harding Park Golf Course at significantly higher 
greens fees than presently paid by non-residents. 
Currently, the maximum fee paid by a non-resident is 
$28. Under the alternative fee structures detailed in the 
Attachment to this report, the maximum non-resident fee 
would range between $95 per round of golf and $125 per 
round of golf with the advance reservation premium. The 
ERA report notes that "operating income projections for 
the alternatives assumes that the volume and mix of play 
among the various resident and non-resident categories 
does not change in response to the changes in the greens 
fees structure. " 



Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



2. The proposed Golf Fee ordinance permits the provision 
of a limited number of advance bookings of golf 
reservations for non-City residents (not to exceed 5,000 
rounds) for an additional premium fee. Currently, City 
residents have preference for booking of reservations. 
Residents are able to book reservations seven days in 
advance, while non-City residents can book reservations 
six days in advance. According to Ms. Jaci Fong, of RPD, 
RPD does not currently intend to alter the preference 
afforded to City residents, except for the option of non- 
City residents to book reservations for an additional 
premium fee. However, the proposed fee ordinance 
contains no specific provision for continuation of 
preferential advance bookings for City residents. 

3. The alternative fee structures shown in the 
Attachment to this report are designed to result in the 
Target Revenue of $4,278,000 annually based on the 
historical levels of play by City residents (65 percent of all 
rounds of golf played at Harding Park) and non-City 
residents (35 percent of all rounds of golf). The fee levels 
in the five alternatives shown in the Attachment to this 
report for City residents, not including discounted rates 
for Seniors and youth, range from $20 weekdays and $25 
on weekends and holidays, to $25 weekdays and $40 
weekends and holidays. Generally, if the higher non- 
resident rates are set in the fee alternative finally 
selected by the Recreation and Park Commission, the 
rates charged for City residents would be lower. All fees 
would be subject to the "caps" specified in the proposed 
ordinance described above. Currently, the maximum 
greens fee for City residents is $21 per round at Harding 
Park and the maximum greens fee for non-residents is 
$28. 

4. According to Mr. Michael Cohen of the City Attorney's 
Office, the purpose of establishing the Golf Fund (File 02- 
0197) is to capture Golf revenues to fund the costs of 
operating and maintaining City Golf courses. Currently, 
the FY 2001-2002 RPD budget includes Golf program 
revenues of $4,509,000 for all five City golf courses. Golf 
expenditures in the FY 2001-2002 RPD budget are 
$3,305,276, or $l,203 r 724 less than the $4,509,000 in 
budgeted Golf program revenues for all City courses. 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Therefore, the net budgeted Golf revenue of $1,203,724 is 
used to fund other items in the RPD FY 2001-2002 
budget. If the proposed Golf Fund ordinance is approved, 
all revenues will be dedicated to the Golf course operation 
and maintenance, plus management and administration. 
According to Ms. Mary King-Gorky of RPD, Golf program 
expenditures included in the current RPD FY 2001-2002 
budget do not include departmental and City overhead 
and general administration costs that are not currently 
charged to the Golf Program in the RPD's existing budget. 
Inclusion of such costs in the proposed Golf Fund would 
result in little or no effect on the City's General Fund 
contribution to the RPD's total budget according to Ms. 
King-Gorky. Mr. Ben Rosenfield, Mayor's Director of 
Finance states that he agrees with this understanding 
and does not anticipate an impact on the City's General 
Fund expenditures if the proposed Golf Fund is approved. 

5. As stated in our report on File 02-0286, the closure of 
Harding Park for the proposed renovation project would 
result in a net loss of revenue of approximately $959,700 
during the 12 months Harding Park would be closed. 
However, Ms. King-Gorky states that the actual golf 
revenues from the operation of Harding Park during FY 
2001-2002 will exceed budgeted revenues by 
approximately $370,000 because it was assumed that 
Harding Park would be closed sooner for the renovation 
project. This would offset the $959,700 revenue loss, 
reducing it to $589,700. 

Ms. King-Gorky states that the proposed Golf program 
budget for FY 2002-2003 for aU of the City's five golf 
courses submitted to the Mayor includes reduced 
revenues due to the closure of Harding Park in the total 
amount of $3,471,000 based on the approval of the 
proposed Harding Park renovation project and related 
legislation, including this proposed ordinance (File 02- 
0198) and proposed expenditures of $3,281,080. Therefore 
proposed FY 2002-2003 Golf program revenues exceed 
proposed expenditures by $189,920 even with the loss of 
Harding Park Revenue. 

6. Because the proposed Golf fee ordinance (File 02- 
0198) provides that specific greens fees will be approved 

Board of Supervisors 
Budget Analyst 



Memo to Finance Committee 

March 27, 2002 Finance Committee Meeting 



Recommendation: 



by the Recreation and Park Commission and will not be 
subject to approval by the Board of Supervisors, the 
Budget Analyst considers approval of this proposed 
ordinance to be a policy matter for the Board of 
Supervisors. In addition, since the creation of the Golf 
Fund (File 02-0197) is related to the Harding Park 
renovation project, the Budget Analyst considers approval 
of that ordinance to be a policy matter for the Board of 
Supervisors. 

7. The proposed Greens Fees ordinance (File 02-0198) 
establishes "Target Revenue" of $4,278,000 in annual 
subject to CPI adjustments in future years for Years 1 to 
5 following the Harding Park renovation project. The 
proposed ordinance does not specify a Target Revenue 
beyond Year 5. According to Mr. Cohen, it was the intent 
of the ordinance to continue to adjust Target Revenue in 
accordance with the annual percentage change in the CPI 
after Year 5. The proposed ordinance should therefore be 
amended to reflect this intent. 

1. Amend the proposed ordinance (File 02-0198) to state 
that Target Revenue will continue to be adjusted by the 
annual percentage change in the CPI after Year 5. 

2. Approval of the proposed Golf Fee ordinance (File 02- 
0198 as amended) and proposed Golf Fund ordinance (File 
02-0197) are policy matters for the Board of Supervisors. 



cc: Supervisor Peskin 
Supervisor Daly 
Supervisor Maxwell 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 




Harvey M. Rose 



Board of Supervisors 
Budget Analyst 



Attachment 
Page 1 of 3 



Harding Park -- Alternative 1 





Weekday 


Weekend/Holiday 


Resident 


S25 


$35 


Resident Senior/Junior 


$15 


$20 


Bay Area Resident 


S45 


$65 


Bay Area Resident Senior/Junior 


$35 


$55 


Non-resident 


$80 


$100 


Advance Reservation Non-resident 


$100 


$125 


Harding Park - Alternative 2 




Weekday 


Weekend/Holiday 


Resident 


$20 


$25 


Resident Senior/Junior 


$14 


$20 


Bay Area Resident 


$45 


$100 


Bay Area Resident Senior/Junior 


$35 


$100 


Non-resident 


$80 


$100 


Advance Reservation Non-resident 


$125 


$130 



Source: Recreation and Park Department 



Attachment 
Page 2 of 3 



Harding Park -- Alternative 3 





Weekday 


Weekend/Holiday 


Resident 


$25 


$40 


Resident Senior/Junior 


$15 


$40 


Bay Area Resident 


$45 


$65 


Bay Area Resident Senior/Junior 


$35 


$65 


Non-resident 


$65 


$95 


Advance Reservation Non-resident 


$90 


$115 


Harding Park -- Alternative 4 




Weekday 


Weekend/Holiday 


Resident 


$25 


$40 


Resident Senior/Junior 


$15 


$40 


Bay Area Resident 


$45 


$65 


Bay Area Resident Senior/Junior 


$35 


$65 


Non-resident 


$80 


$100 


Advance Reservation Non-resident 


$100 


$125 



Source : Recreation and Park Department 



Attachment 
Page 3 of 3 



Harding Park -- Alternative 5 





Weekday 


Weekend/Holiday 


Resident 


$25 


$35 


Resident Senior/Junior 


$15 


$20 


Bay Area Resident 


-- 


- 


Bay Area Resident Senior/Junior 


- 


-- 


Non-resident 


$75 


$100 


Advance Reservation Non-resident 


— 


— 


Fleming - Alternative 1 




Weekday 


Weekend/Holiday 


Resident 


$16 


$18 


Resident Senior/Junior 


$8 


$12 


Non-resident 


$18 


$22 



Source : Recreation and Park Department 



X^^&v City and County of San Francisco Clt > Ha » 

nJSSwm Meeting Minutes G °° dlett Place 

"LjjffiK^*S[ jii) San Francisco, CA 

%W§^W^J Finance Committee 94102-4689 

xi^TooJx Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: GailJohnson 

Wednesday, April 03, 2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



President Ammiano appointed himself to serve as a member of the Finance Committee. 
MEETING CONVENED 

The meeting convened at 12:41 p.m. 

020197 |GolfFund] 

Supervisors Hall, Daly 

Ordinance amending Chapter 1 0, Article XIII of the San Francisco Administrative Code by adding Section 
10.100-256 thereto, establishing a San Francisco Recreation and Parks Golf Fund. 
2/4/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 3/6/2002. 
3/18/02, SUBSTITUTED. Supervisor Hall submitted a substitute ordinance bearing same title. 
3/18/02, ASSIGNED to Finance Committee. 

3/27/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Cohen, Deputy City Attorney; Elizabeth 
Goldstein, General Manager, Recreation and Park Department; Commissioner Lynne Newhouse Segal, Recreation and Park Commission; 
Gary Hoy, Capital Program Manager, Recreation and Park Department; Dan McKenna, Acting Superintendent, Recreation and Park 
Department; Jaci Fong, Director of Property Management, Recreation and Park Department; Leon Gilmore, Western Regional Director, 
The First Tee, Commissioner Jesse Arreguin, Youth Commission; Gene Krekorian, Economics Research Associates (ERA); Ken Bruce, 
Budget Analyst's Office; Theodore Lakey, Deputy City Attorney; Mike Ippocito; Mr. A. D. Ward, Director, Allen Junior Golf Program, 
Duane Perry; Dan DeVries, President, Lincoln Park Golf Club; Bo Links; Phil Havlicek; Reola Freeman; Jene Lamison; Xavier Schmidt; 
Lou Perrone, President, Harding Park Golf Club; Connell Craig; Linda Hunter, Neighborhood Parks Council; Josh Kauffman, Sandy 
Tatum; Bud Wilson, Greater West Portal Neighborhood Association. 
Continued to 4/3/02. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Supervisor Hall: Supervisor Hall; Elizabeth 
Goldstein, General Manager, Recreation and Park Department. 

Amendment of the Whole adopted. Amended on page 3 , line 19, by replacing "such" with "any." 
AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 1 Printed at 6:10 r\l on .? 2 04 



Finance Committee 



Meeting Minutes 



April 3, 2002 



012281 [Airport Concession Lease] 

Resolution approving a lease and operating agreement for operating the Self Service Luggage Cart Program, 
Between Smarte Carte, Inc., and the City and County of San Francisco, Acting by and through its Airport 
Commission. (Airport Commission) 

(Fiscal impact.) 

12/19/01, RECEIVED AND ASSIGNED to Finance Committee. 

1/9/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Peter Nardoza, Deputy Director, San Francisco 

Airport; Lou Cesario, Director of Operations and Development, Smarte Carte, Inc.; John Kennedy, Deputy City Attorney; Daniel Lynch, 

Business Representative, Teamsters Local 665. 

Continued to 1/23/02. 

1/23/02, CONTINUED TO CALL OF THE CHAIR. Speakers: None. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Robert McCarthy, McCarthy and Schwartz; 

Peter Nardoza, Airport; Edward Harrington, Controller; Theodore Lakey, Deputy City Attorney; Lou Cesario, 

Smarte Carte, Inc. 

Amended as follows: 

On lines 5 and 20, after "Francisco, " by adding "as amended; " 

On lines 17 and 21 by replacing "$10,636,000" with "$10,121,000;" 

On line 21, after "Airport, " by adding "each subject to Board of Supervisors approval," 

On line 22, at the end of the resolution, by adding "The Airport shall report back to the Board, the Board's 

Budget Analyst and the Controller on an annual basis regarding usage of the Smarte Cartes under this 

contract. " 

To Board for consideration on 4/22/02. 

AMENDED. 

Resolution approving a lease and operating agreement for operating the Self Service Luggage Cart Program, 

Between Smarte Carte, Inc., and the City and County of San Francisco, as amended, acting by and through its 

Airport Commission. (Airport Commission) 

(Fiscal impact.) 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020251 (Reserved Funds, Department of the Environment] 

Hearing to request release of reserved funds, Department of the Environment (Fiscal Year 2001-2002 Budget), 
in the amount of $104,300 to provide professional services in support of Department programs. (Environment) 
2/28/02, RECEIVED AND ASSIGNED to Finance Committee. 
3/20/02, CONTINUED. Speakers: None. 
Continued to 4/3/02. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Mark Weston, Department of the Environment. 
Release of reserved funds in the amount of $104,300 approved. 
APPROVED AND FILED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco 



Printed at 6: 1 1 PM on 3/2/04 



Finance Committee 



Meeting Minutes 



April 3, 2002 



020393 [Reserved Funds, S.F. Environment] 

Hearing to consider release of reserved funds, S.F. Environment (State grant funds, File No. 011431: 
Resolution No. 647-01), in the amount of $97,500 to fund the monitoring and verification portion of the power 
savers small business energy efficiency retrofit program. (Environment) 
3/13/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Mark Weston, Department of the Environment. 
Release of reserved funds in the amount of $97,500 approved. 
APPROVED AND FILED by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



020404 [MOU Amendment No. 1 - 2001-2003 Collective Bargaining between MEA and CCSF] 
Mayor 

Ordinance adopting and implementing Amendment No. 1 to the 2001-2003 Collective Bargaining Agreement 

between the Municipal Executives' Association and the City and County of San Francisco by amendmg Article 

III.DD to incorporate the parties' agreement regarding the Management Compensation and Classification Plan. 

(Mayor) 

3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Peg Stevenson, Controller's Office; Andrea 

Gourdine, Director, Department of Human Resources; Theodore Lakey, Deputy City Attorney; Geoffrey 

Rothman, Director, Employee Relations Director, Human Resources Department; 

AMENDED. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



020405 [MOU Amendment No. 1 - 2001-2003 Collective Bargaining between IFPTE, Local 21 and CCSF] 
Mayor 

Ordmance approving a settlement and adopting and implementing Amendment No. 1 to the 2001-2003 

Collective Bargaining Agreement between the International Federation of Professional and Technical 

Engineers, Local 21 and the City and County of San Francisco by amending Article III.B.l.p to incorporate the 

parties' settlement of an interest arbitration proceeding over wage adjustments for professional architect and 

landscape architect classifications. (Mayor) 

3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. 

REFERRED WITHOUT RECOMMENDATION by the following vote: 

Ayes: 2 - Peskin, Daly 

Absent: 1 - Ammiano 



020448 [California Debt Limit Allocation Committeel 
Mayor 

Resolution authorizing an application to the California Debt Limit Allocation Committee to permit the issuance 
of Mortgage Credit Certificates. (Mayor) 
3/18/02, RECEIVED AND ASSIGNED to Finance Committee 

Heard in Committee. Speakers: Harvey Rose. Budget Analyst; Meg Davis, Director of Single Family 
Programs, Mayor's Office of Housing; Theodore Lakey, Deputy City Attorney. 
RECOMMENDED., by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francis 



Primed at h:ll PM on } 2 OJ 



Finance Committee Meeting Minutes April 3, 2002 



020333 |Outreach Advertising] 

Resolution approving additional funds for outreach advertising in fiscal year 2001-2002. (Purchaser) 

3/6/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. 

Amended on lines 17 and 21, by replacing "520,682" with "$27,354." 

AMENDED. 



RECOMMENDED AS AMENDED by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



SPECIAL ORDER - 2:00 PM 



020172 [Implementation of Equal Access to Services Ordinance] 
Supervisor Leno 

Hearing to receive an update from Tier 1 City Departments on their implementation of the Equal Access to 
Services Ordinance. 

1/28/02, RECEIVED AND ASSIGNED to Finance Committee. Sponsor requests this item be scheduled for consideration at the February 
13, 2002 meeting. 

Heard in Committee. Speakers: Supervisor Leno; Harvey Rose, Budget Analyst; Commissioner Emily 
Fumakuma, Immigrant Rights Commission; Dang Pham, Executive Director, Immigrant Rights Commission; 
Reg Smith, District Attorney's Office; Captain Tim Hettrick, Police Department; Sarah He, Legislative 
Assistant to Supervisor Maxwell; Lee Samson, Adult Probation Department; Joanne Hollins, Aging and Adult 
Services; Amy Sinclair, Consumer Assurance; Magolly Fernandez, Civil Rights Officer, Department of Human 
Services; Julie Saucer, Department of Parking and Traffic; Tammy Haygood, Director of Elections; Norm 
Nickens, Executive Director, Office of Equal Employment Opportunity, Affirmative Action, and Cultural 
Competency; Department of Public Health; Laura Spanjian, Municipal Railway; Female Speaker, Emergency 
Communications; Kai AH, Assistant Deputy Chief, Fire Department; Male Speaker, Juvenile Probation; 
Jimmy Austin, Public Defender; Joe Grubb, Executive Director. Rent Board; Jacqueline Pun, Sheriffs Office; 
Theodore Lakey, Deputy City Attorney. 

CONTINUED TO CALL OF THE CHAIR by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



ADJOURNMENT 



The meeting adjourned at 4:57 p.m. 



City and County of San Francisco 4 Printed at 6:11 PM on 3/2/04 




[Budget Analyst Report] 
Susan Horn 
city and county ^eSBtiHSLIji) OF S / N F Main Library-Govt. Doc. Section 



^OARD OF SUPERVISORS 

BUDGET ANALYST 

1390 Market Street. Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



March 28, 2002 

TO: ^Finance Committee DOCUMENTS DEPT. 

FROM: ^Budget Analyst Ann 

APR - 3 2002 

SUBJECT: April 3, 2002 Finance Committee Meeting g^ FRANCISCO 

Item 1 - File 02-0197 



PUBLIC LIBRARY 



Note: This item was continued by the Finance Committee at its meeting of March 
27, 2002 in order to permit further discussion of concerns raised by the 
Controller over the language of the proposed ordinance. The Controller, 
General Manager of Recreation and Park Department, Mayor/s Budget 
Director and Budget Analyst will be meeting on this matter and any 
recommended changes to the proposed ordinance will be presented to the 
Finance Committee directly on April 3, 2002. 

Department: Recreation and Park Department (RPD) 

Items: Ordinance amending Chapter 10, Article XIII of the 

Administrative Code by adding Section 10.100-256 
thereto, establishing the San Francisco Recreation and 
Park Golf Fund. 

Description: The proposed ordinance would amend the Administrative 

Code by adding Section 10.100-256 to establish the San 
Francisco Recreation and Park Golf Fund. The San 
Francisco Recreation and Park Golf Fund would be 
established as a Category Four Fund 1 to receive, effective 
July 1, 2002, all revenues derived from any City Golf 



1 Under Administrative Code Section 10.100-1, a Category Four Fund: a) must receive appropriation 
approval by the Mayor and the Board of Supervisors: b) interest earnings shall accumulate to the 
Fund, and c) unexpended balances will be carried forward within the Fund. 



Memo to the Finance Committee 

April 3, 2002 Finance Committee Meeting 



Courses under the jurisdiction of the Recreation and Park 
Department. 

Under the proposed ordinance, all revenues derived from 
City Golf Courses, including Greens Fees and concession 
revenues, would be restricted to the following uses: 

1. Operation and maintenance of the Golf Courses 
pursuant to budgets for each Golf Course annually 
approved by the Recreation and Park Commission and 
the Board of Supervisors, including general and 
administrative costs, and utilities, provided that the 
Department would not cause the maintenance 
standards for the Harding Park Golf Course to exceed 
the Maintenance Standards for Harding Park set forth 
in the City's Master Tournament Agreement with the 
PGA (see Item 8, File 02-0201); 

2. An annual set aside within the Golf Fund of $250,000, 
increasing by the percentage change in the Consumer 
Price Index each year, beginning within twelve (12) 
months after Harding Park reopens after renovation 
(the "Project") and occurring every fiscal year 
thereafter, to be used exclusively for capital 
improvements and facilities maintenance projects at 
Harding Park; 

3. Payments to the Park, Recreation and Open Space 
Fund (Open Space Fund), as described in City Charter 
Section 16.107, on a schedule and in amounts 
sufficient to pay the capital portion of the Open Space 
Fund the full cost of the Harding Park renovation 
Project paid from the proceeds of applicable State 
grant programs and excluding any charitable 
donations, beginning upon the conclusion of the 
Project, plus to pay the Open Space Fund generally 
interest on such principal amount at an annual rate 
determined once a year by the Commission, provided 
that such interest rate would at least equal to the 
greater of (a) the City's cost of borrowing funds under 
the Open Space Fund if and to the extent it has at the 
time the Commission makes such determination 
outstanding bonded indebtedness under the fund or (b) 
one percent less than the Prime domestic commercial 
lending rate in effect at such time of Bank of America 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to the Finance Committee 

April 3, 2002 Finance Committee Meeting 



or such other major financial institution selected by 
City, compounded annually, within twenty-five (25) 
years. Further, in any year that the actual annual Net 
Cash Flow received by the Department from the 
operation of the Harding Park and Fleming Golf 
Courses exceeds the projected Net Cash Flow for that 
year ("Bonus Profit") 25 percent of that amount would 
be applied to accelerate reimbursement to the Open 
Space Fund for the costs funded by the State grants 
and matching funds from the Open Space Fund of the 
Harding Park renovation project, and provided further 
that in any year in which the Bonus Profit exceeds 
One Million Dollars ($1,000,000), fifty percent (50%) of 
such Bonus Profit would be applied to accelerate 
repayment of the Open Space Fund for the costs 
funded by the State grants and matching funds from 
the Open Space Fund; 

4. Improvements, renovations and capital expenditures 
at any of the Golf Courses upon approval of any such 
expenditures by the Recreation and Park Commission; 

5. Payment of annual debt service of principal and 
interest thereupon for any debt-funded improvements 
and renovations at any of the Golf Courses upon 
necessary approvals by the Recreation and Park 
Commission and the Board of Supervisors 

6. Capital improvements to the park and recreation 
areas contiguous to Harding Park and under the 
Department's jurisdiction, pursuant to plans approved 
by the Recreation and Park Commission. Upon future 
renovations of Golf Courses other than Harding Pai k 
additional annual set asides for capital improvements 
would be established for recreation areas or parks 
under the Department's jurisdiction contiguous to each 
such improved Golf Course. 

7. Administration of Fund. All expenditures from the 
San Francisco Recreation and Park Golf Fund are 
subject to approval of the Recreation and Park 
Commission and appropriation approval by the Board 

of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to the Finance Committee 

April 3, 2002 Finance Committee Meeting 

Comments: 1. According to Mr. Michael Cohen of the City Attorney's 

Office, the purpose of establishing the Golf Fund is to 
capture Golf revenues to fund the costs of operating and 
maintaining City Golf courses. Currently, the FY 2001- 
2002 RPD budget includes Golf program revenues of 
$4,509,000 for all five City golf courses. Golf expenditures 
in the FY 2001-2002 RPD budget are $3,305,276, or 
$1,203,724 less than the $4,509,000 in budgeted Golf 
program revenues for all City courses. Therefore, the net 
budgeted Golf revenue of $1,203,724 is used to fund other 
items m the RPD FY 2001-2002 budget. If the proposed 
Golf Fund ordinance is approved, all revenues will oe 
dedicated to the Golf course operation and maintenance, 
plus management and administration. According to Ms. 
Mary King-Gorky of RPD, Golf program expenditures 
included in the current RPD FY 2001-2002 budget do not 
include departmental and City overhead and general 
administration costs that are not currently charged to the 
Golf Program in the RPD's existing budget. Inclusion of 
such costs in the proposed Golf Fund would result in little 
or no effect on the City's General Fund contribution to the 
RPD's total budget according to Ms. King-Gorky. Mr. Ben 
Rosenfield, Mayor's Director of Finance states that he 
agrees with this understanding and does not anticipate an 
impact on the City's General Fund expenditures if the 
proposed Golf Fund is approved. 

2. Ms. King-Gorky states that the proposed Golf program 
budget for FY 2002-2003 for all of the City's five golf 
courses submitted to the Mayor includes reduced 
revenues due to the closure of Harding Park in the total 
amount of $3,471,000 based on the approval of the 
proposed Harding Park renovation project and related 
legislation, and proposed expenditures of $3,281,080. 
Therefore proposed FY 2002-2003 Golf program revenues 
exceed proposed expenditures by $189,920 even with the 
loss of Harding Park Revenue due to the renovation 
project. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to the Finance Committee 

April 3, 2002 Finance Committee Meeting 

3. The proposed Golf Fund is a category four fund and 
therefore the expenditures from the fund are subject to 
appropriation approval by the Mayor and the Board of 
Supervisors. However, page 4, lines 7 and 8 of the 
proposed ordinance state that "All expenditures from the 
San Francisco Recreation and Parks Golf Fund are subject 
to approval of the Recreation and Park Commission" . 

In order to clarify that proposed expenditures from the 
Golf Fund are to be subject to appropriation approval by 
the Mayor and the Board of Supervisors, the Budget 
Analyst recommends that the proposed ordinance be 
amended by inserting language stating that proposed 
expenditures shall be subject to the Budget and Fiscal 
provisions of the Charter. 

Recommendation: 1. Amend the proposed ordinance by changing the 

following language in the text on page 4, line 8 "All 
expenditures from the San Francisco Recreation and 
Parks Golf Fund are subject to approval of the Recreation 
and Park Commission" to read ""All expenditures from the 
San Francisco Recreation and Parks Golf Fund are subject 
to approval of the Recreation and Park Commission and 
shall be subject to the budget and fiscal provisions of the 
Charter. " 

2. Approval of the proposed ordinance, as amended, is a 
policy matter for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 2 - File 01-2281 

Note: This proposed resolution was continued by the Finance Committee at the 
Finance Committee Meeting of January 23, 2002. 

Summary: This proposed resolution would approve a Lease and 

Operating Agreement between Smarte Carte, Inc. and the 
City and County of San Francisco, acting by and through the 
Airport Commission, for the operation of both the free and 
the for-pay Self-Service Luggage Cart Program at the San 
Francisco International Airport. 

Since this resolution was last heard by the Finance 
Committee, based on inquiries of the Committee, the Airport 
has negotiated an addendum that changes the fee structure 
and cost to the Airport of the Lease and Operating 
Agreement between Smarte Carte, Inc. and the Airport. 

The changes to the proposed agreement are shown in 
Attachment I to this report. Attachment I includes a chart 
which compares the existing agreement with the previously 
proposed agreement as originally submitted to the Board of 
Supervisors (old proposal) and the currently proposed 
agreement (new proposal) as amended by the negotiated 
addendum. A copy of the addendum to the proposed 
agreement is also included in Attachment I. The changes to 
the proposed agreement are as follows: 

1. The originally proposed agreement provided that the total 
cost of the free luggage cart services to the Airport would 
be the gross total "not to exceed" amount of $12,886,000 
for operating the free cart services in the "Customs 
Program", "Rental Car Facility Program" and the 
"AirTrain Failure Contingency Program", over the five- 
year term of the subject agreement or an average total 
"not to exceed" amount of $2,577,200 per year over the 
five year initial term of the agreement. 

The cost provision of the proposed agreement is now 
amended by the addendum to provide that the annual 
cost to the Aii-port to provide the free luggage cart 
services is the lower of either $1.20 per free cart actually 
used in the Customs Program or the following maximum 
amounts annuallv: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

6 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Year 1 $2,223,000 

Year 2 2,336,000 

Year 3 2,466,000 

Year 4 2,602,000 

Year 5 2.744.000 

Total Maximum Cost $12,371,000 

Under the old proposed agreement, the Customs Program 
cost to the Airport was a fixed amount equal to the 
amounts shown in the table above instead of the lesser of 
the fixed amounts shown above or $1.20 per actual 



As reported previously, the existing agreement with 
Smarte Carte provides for payment by the Airport for free 
luggage carts actually used in the Customs Program at a 
rate of $0.70 per cart used, with no maximum annual 
payment amount. The Airport states that for the 12- 
month period of November 1, 2000 through October 31, 
2001 the Airport's total expense under the existing 
agreement was $981,252 based on approximately 
1,401,788 luggage carts used at the rate of $0.70 per cart 
used. At the proposed rate of $1.20 per cart used, the total 
cost to the Aii-port would be $1,682,146 annually for the 
same level of cart utilization or $540,854 less than the 
$2,223,000 maximum amount for Year 1 of the previously 
proposed agreement and the current proposed agreement 
as amended by the addendum. 

2. The addendum to the proposed agreement now provides 
that free luggage carts used in the Rental Car Facility 
Program will be provided by Smarte Carte at no 
additional cost. Previously, the proposed agreement called 
for the Rental Car Facility Program to be provided at a 
cost to the Airport of $480,000 annually until such time 
as the AirTrain transit system is operational. AirTrain is 
expected to be operational on August 10, 2002. 

3. The addendum to the proposed agreement now provides 
that the cost of the AirTrain Failure Contingency 
Program would be provided at no additional cost to the 
Airport. The previously proposed agreement called for 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

7 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



(AirTrain Failure Contingency Program) would be 
provided at a fixed cost of $7,000 annually based on $500 
per day for an estimated 14 days of AirTrain failure 
annually, or a total estimated five-year cost of $35,000. 

4. Currently, the cart rental rate for the for-pay Self-Service 
Luggage Cart Rental Program is $2.00 per cart use. The 
addendum to the proposed agreement would permit 
Smarte Carte to increase this rental rate to a maximum 
of $3.00 per cart used provided that Smarte Carte shall 
be entitled to raise the rental rate only with the Airport 
Director's prior consent, "which consent may be granted or 
withheld in [the] Director's sole discretion" according to 
the addendum. Any increase in the luggage cart rental 
rate would not be subject to approval by the Board of 
Supervisors. In addition, the Budget Analyst notes that 
the Airport Director has recently approved the increased 
rental rate of $3.00 under the existing agreement, 
effective April 1, 2002, and intends to approve such an 
increased rental rate under this proposed agreement if 
the proposed agreement is approved by the Board of 
Supervisors. 

5. The addendum to the proposed agreement now provides 
that the Minimum Annual Guarantee paid to the Airport 
by Smarte Carte for the for-pay self-service luggage cart 
rental payment would be $450,000 annually ($2,250,000 
over the five year term of the Agreement) or 25 percent of 
Smarte Carte's gross revenue, whichever is greater., The 
previously proposed agreement provided that a Minimum 
Annual Guarantee would be paid to the Airport by 
Smarte Carte of $450,000 annually or 15 percent of 
Smarte Carte's gross revenue, whichever is greater. 
Based on the gross revenues realized by Smarte Carte in 
FY 2000-2001, the increase in percentage of gross 
revenue from 15 percent to 25 percent would result in 
increased annual rent to the Airport of an estimated 
$112,380 (see Comment 1) or an increase of $561,900 over 
the five year term of the agreement. 

The remainder of this report is based on the proposed 
agreement as amended by the addendum described above. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Department: Airport Commission 



Item: 



Location: 



Purpose of Lease 
and Operating 
Agreement: 



Lessor: 



Lessee: 

Term of Lease 
and Operating 
Agreement: 



Resolution approving a Lease and Operating Agreement 
between Smarte Carte, Inc. and the City and County of San 
Francisco, acting by and through the Airport Commission, 
for the operation of the Self-Service Luggage Cart Program 
at the San Francisco International Airport. 

San Francisco International Airport and the Airport's Rental 
Car Facility, located on Airport property at McDonnell Road. 

Concession space for the purpose of (1) renting self-service 
luggage carts to passengers, and, (2) operating the free cart 
services for the "Customs Program", "Rental Car Facility 
Program" and the "AirTrain 1 Failure Contingency 
Program" (see Description below for program descriptions). 

City and County of San Francisco by and through the Airport 
Commission 

Smarte Carte, Inc. 

Five years, commencing no earlier than February 1, 2002 
and no later than April 1, 2002, and terminating after five 
vears from this commencement date in 2007. 



Right of Renewal: Five, one-year extensions, beginning in 2007. 



Annual Rent 
Payable by 
Smarte Carte 
to the Airport: 



The annual rent payable to the Airport from Smarte Carte, 
Inc. for the for-pay Self-Service Luggage Cart Rental 
Program is the greater of either the Minimum Annual 
Guarantee of $450,000, or 25 percent of gross revenues. The 
Minimum Annual Guarantee will be adjusted annually on 
the anniversary date of the subject agreement. The 
adjustment is based on a formula, which compares the 
percentage increase in "U.S. City Average - Transportation 
Services" Consumer Price Index (CPI) and the total number 
of airline passengers on the anniversary date to the "U.S. 
City Average - Transportation Services" CPI and the total 
number of airline passengers at the commencement of the 
subject agreement. The Minimum Annual Guarantee can 
onlv increase. 



1 As part of the .Airport's Master Plan Program, the Airport is constructing an on-Airport AirTrain 
system (the 'AirTrain") to transport passengers throughout the Airport, to and from the Rental Car 
Facility and BART. The AirTrain is scheduled to be operational on August 10, 2002. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

9 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Utilities and 

Janitorial 

Services: 



Amount Payable 
by Airport to 
Smarte 
Carte, Inc: 



Description of 
Proposed Lease 
and Operating 
Agreement: 



The Lessee will pay for the costs of all utilities and 
janitorial services. According to Ms. Patricia Maitland of 
the Airport, janitorial services are not broken out as a line 
item m the lessor's budget because their employees 
perform this function as a part of their regular duties. 

The Airport would be responsible for payment to Smarte 
Carte, Inc. the gross total "not to exceed" amount of 
$12,371,000 for operating the free luggage cart services in 
the "Customs Program", "Rental Car Facility Program" and 
the "AirTrain Failure Contingency Program", over the five- 
year term of the subject agreement or an average gross 
amount of $2,474,200 per year (see Comment No. 6). 
However, Smarte Carte, Inc. must pay the Airport a 
minimum total rent of $2,250,000 (Minimum Annual 
Guarantee or $450,000 for five years, as adjusted 
annually.). Therefore, the net "not to exceed" amount 
payable to Smarte Carte is $10,121,000 ($12,371,000 less 
$2,250,000). 

The proposed Luggage Cart Lease and Operating 
Agreement (Agreement) comprises two major parts: (1) the 
operation of the Self-Service Luggage Cart Rental Program 
as a concession; and (2) the provision of luggage carts free 
of charge under the "Customs Program", the "Rental Car 
Facility Program", and the "AirTrain Failure Contingency 
Program" (the "Free Services") as described below. 

SELF-SERVICE LUGGAGE CART RENTAL PROGRAM: 

Under the proposed Agreement, Smarte Carte, Inc. would (a) 
provide a fleet of no less than 3,000 luggage carts, equipped 
with brakes 2 available for rent at $2.00 per cart or such 
amount approved by the Airport Director; (The proposed 
agreement now provides that the luggage cart rental rate 
would be subject to an increase of $1.00 to $3.00 per cart if 
the Airport Director approves such an increase. Such an 
increase would not be subject to approval by the Board of 



- The terms of the proposed Agreement require Smarte Carte to equip the luggage carts with brakes. 
Existing self-service luggage carts do not have brakes, according to Ms. Maitland. Ms. Maitland 
advises that Smarte Carte will either equip their existing fleet of luggage carts with brakes or 
manufacture new carts with brakes in order to meet the terms of the subject Agreement. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

10 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Supervisors.); (b) install, maintain and repair, of such 
luggage carts: (c) install, maintain and repair of luggage cart 
vending units, which automatically dispense luggage carts to 
the public; and, (d) collect and relocate luggage carts as- 
needed. Smarte Carte, Inc. will pay the Airport concession 
rent equal to the greater of the Minimum Annual Guarantee 
amount of $450,000 or 25 percent of gross revenues (see 
Comment No. 1). With respect to the rental rate increase 
from $2.00 per cart to $3.00 per cart, the Budget Analyst 
notes that the Airport Director has recently approved the 
increased rental rate of $3.00 under the existing agreement, 
effective April 1, 2002, and intends to approve such an 
increased rental rate under this proposed agreement if the 
proposed agreement is approved by the Board of Supervisors. 

Free Services: 

(1) Customs Program . Smarte Carte, Inc. must provide no 
less than 2.000 luggage carts in the Customs area of the 
International Terminal where arriving international 
passengers are subject to Federal inspection services. The 
luggage carts will continue to be available without a rental 
charge in the custom area as they are currently (see 
Comment No. 2). 

(2) Rental Car Facility Program . Smarte Carte, Inc. must 
provide no less than 500 luggage carts at the Rental Car 
Facility until AirTrain is operational and open to the public 
for transport to the Rental Car Facility. The luggage carts 
will continue to be available without a rental charge in these 
areas as they are currently (see Comment No. 3). 

(3) AirTrain Failure Contingency Plan . Smarte Carte, 
Inc. must provide no less than 500 luggage carts at the 
Rental Car Facility upon notification from the Airport that 
there is or may be an AirTrain failure, and buses must be 
used to transport passengers from the Airport Terminal to 
the Rental Car Facility. Smarte Carte, Inc. must provide, 
luggage carts in the Rental Car Facility free of charge until 
the AirTrain service resumes or as otherwise directed by 
Airport Director. 

As with the Self-Service Luggage Cart Rental Program, 
Smarte Carte, Inc. would also be responsible for the (a) 
installation, maintenance and repair of the luggage carts: (b) 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

11 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

installation, maintenance and repair of the vending units; 
and, (c) collection and relocation of luggage carts as-needed 
for the free carts. 

Attachment II, provided by the Airport, is a list of luggage 
cart vending machine locations at the Airport. The total 
fleet of luggage carts that Smarte Carte, Inc. must supply is 
no less that 5,500 carts. 

Comments: 1. According to Ms. Maitland, the Airport currently contracts 

with Smarte Carte, Inc. to provide (1) the operation of the 
for-pay Self-Service Luggage Cart Rental Program, wherein 
Smarte Carte, Inc. pays the Airport a Minimum Annual 
Guarantee of $225,000 or 16.7 percent of gross revenues 
whatever is greater; ; and (2) free luggage cart service in the 
Customs area of the International Terminal and in the 
Rental Car Facility at a cost to the Airport. Ms. Maitland 
advises that the self-service luggage carts are currently 
rented for $2.00 per cart and the rental rate was last raised 
from $1.50 per cart to $2 per cart on March 1, 2000. As 
noted previously, the Airport Director has approved an 
increase in the cart rental rate to $3.00 effective April 1, 
2002. 

In the attached memorandum from Ms. Maitland, 
Attachment III, Ms. Maitland states that the existing 
agreement with Smarte Carte, Inc. began in July of 1991 and 
expired in July of 2001. The Airport has continued to 
contract with Smarte Carte, Inc. on a month-to-month basis 
since that time under the same terms as the prior 
agreement. Attachment III has been updated by the Airport 
to reflect the currently proposed agreement as amended by 
the addendum shown in Attachment I. 

Under the existing agreement for the for-pay Self-Service 
Luggage Cart Rental Program, Smarte Carte, Inc. must pay 
the greater of either the Minimum Annual Guarantee of 
$225,000 or 16.7 percent of gross revenues. 

A comparison of revenues payable by Smarte Carte to the 
Airport under the existing agreement and the proposed 
agreement as amended by the Addendum for the rental 
luggage carts, using actual gross Smarte Carte revenues for 
FY 1999-2000 and FY 2000-2001, is as follows: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

12 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Minimum Annual Guarantee 
Percentage of Gross Revenues 

FY 1999-2000 Gross Revenues 

Minimum Annual Guarantee 
(MAG) or Percentage Rent 
Payable to Airport 

FY 2000-2001 Gross Revenues 

Minimum Annual Guarantee 
(MAG) or Percentage Rent 
Payable to Airport 



Existing Agreement 

$225,000 
16.7% 

$2,052,699 



$342,801 

(Percentage Rent) 

$2,249,521 

$375,670 

(Percentage Rent) 



Proposed Agreement 

as Amended by the 

Addendum 

$450,000 
25.0% 

$2,052,699 



$513,175 

(Percentage Rent) 

$2,249,521 

$562,380 

(Percentage Rent) 



As can be seen in the table above, based on FY 2000-2001 
revenues, the Airport would receive $562,380 annual 
revenue under the proposed 25 percent of gross revenue 
percentage rent, which exceeds the Minimum Annual 
Guarantee of $450,000, resulting in an increase of $112,380 
($562,380 less $450,000). 

2. Ms. Maitland advises in Attachment III that the free cart 
Customs Program has been paid for by the Airport since 
1994. According to Ms. Maitland, the Airport provides free 
carts to arriving international passengers for the following 
reasons: (1) the Airport is an international gateway; (2) 
international passengers arriving at the Airport possess a 
higher than average amount of luggage necessitating the use 
of a luggage cart; (3) arriving international passengers do not 
usually have the correct type and amount of currency to rent 
a cart; and, (4) U.S. Customs officials have repeatedly 
refused to permit a Currency exchange service inside the 
Customs area. 



According to Ms. Maitland, under the existing agreement, 
Smarte Carte, Inc. is paid $0.70 per cart each time a 
passenger uses a free cart in the Customs area. Ms. 
Maitland advises that there currently is no maximum 
amount payable to Smarte Carte, Inc. for the free carts in 
the Customs area. Under the proposed Agreement, Smarte 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

13 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Carte, Inc. would be paid the lower of $1.20 per free cart 
actually used in the Customs Program or the following 
maximum amounts annually: 

Year 1 $2,223,000 

Year 2 2,336,000 

Year 3 2,466,000 

Year 4 2,602,000 

Year 5 2.744.000 

Total maximum cost $12,331,000 

The Airport states that for the 12-month period of November 
1, 2000 through October 31, 2001 the Airport's total expense 
under the existing agreement was $981,252 based on 
approximately 1,401,788 luggage carts at the rate of $0.70 
per cart used. At the proposed rate of $1.20 per cart used, the 
total cost to the Airport would be $1,682,146 annually for the 
same level of cart utilization or $540,854 less than the 
$2,223,000 maximum amount for Year 1 of the proposed 
agreement. 

3. Ms. Maitland reports that the Rental Car Facility 
Program was instituted upon the opening of the Rental Car 
Facility on McDonnell Road in January of 1999. Currently, 
passengers are bussed from the Airport terminals to the 
Rental Car Facility and vice versa. According to Ms. 
Maitland, the Airport received numerous complaints that 
passengers had to rent a cart twice, once at the terminals 
and again at the Rental Car Facility. The AirTrain will 
accommodate luggage carts, however, in the meantime, the 
Airport perceived providing luggage carts for free at the 
Rental Car Facility as a critical service for passengers going 
to and from the Rental Car Facility. The Airport currently 
pays a flat annual fee of $487,000, or $40,583 per month for 
the free luggage carts at the Rental Car Facility. Upon 
commencement of AirTrain, which is estimated to be August 
10, 2002, this service will cease and the Airport will no 
longer pay for free carts at the Rental Car Facility unless the 
AirTrain system fails (see Comment No. 5). A comparison of 
the existing agreement with the proposed Agreement for the 
provision of free carts under the Rental Car Facility Program 
is as follows: 



BOARD OF SUPERVISORS 
BUDGET ANALYST 
14 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Proposed Agreement 
as Amended by the 
Existing Agreement Addendum 

Rental Car Facility $487,000 per year No Additional Cost 

Program 

4. Ms. Maitland advises that currently the Airport is paying 
Smarte Carte, Inc. approximately $122,354 per month 3 for 
the free luggage carts in the Customs Area and at the Rental 
Car Facility. 

5. Because the AirTrain has not previously existed at the 
Airport, the AirTrain Failure Contingency Program is a new 
component of the Self-Service Luggage Cart Agreement. The 
proposed agreement, as amended by the addendum, provides 
that this service would be provided at no additional cost to 
the Airport. 

6. As noted above, the subject Agreement is for a five year 
period for a gross "not to exceed" amount of $12,371,000 for 
the free luggage cart services in the "Customs Program", 
"Rental Car Facility Program" and the "AirTrain Failure 
Contingency Program". Ms. Maitland advises that the 
maximum figure of $12,371,000 includes (a) the total 
Customs Program maximum cost of $12,371,000; (b) the total 
Rental Car Facility Program at no additional charge; and, (c) 
the AirTrain Failure Contingency Plan over the five-year 
term at no additional charge. However, Smarte Carte, Inc. 
must pay the Airport a minimum of $2,250,000 in rent for 
the five-year term of the subject Agreement ($450,000 
annually), subject to an annual adjustment. Therefore, the 
net "not to exceed" amount for the five-year Agreement 
payable by the Airport to Smarte Carte is $10,121,000. Ms. 
Maitland advises that if the subject Agreement is approved, 
any of the five one-year contract extensions could be 
authorized by the Airport Commission, without subsequent 
Board of Supervisors approval. Attachment I, provided by 
the Airport, shows the estimated maximum costs payable by 
the Airport to Smarte Carte and the rent payments payable 



? Ms. Maitland advises that this monthly figure was derived by taking a 12-month average of 
luggage carts used in Customs, less the 16.7% of gross revenue payable as rent to the Airport or 
$81,771, plus the monthly Rental Car Facility fee of S40.583. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

15 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

by Smarte Carte to the Airport for the subject Agreement 
over a ten-year period, including the five, one-year 
Agreement extensions. 

7. According to Ms. Maitland, the Airport Commission 
awarded the subject Agreement to Smarte Carte, Inc. based 
on a three-member panel's determination via written 
proposal and practical demonstration, that Smarte Carte, 
Inc. offered the best overall program. Ms. Maitland advises 
that proposals were received from the following three firms 
(1) Smarte Carte, Inc.; (2) Airport Carts, LLC; and (3) Top 
Cart, LLC. However, Ms. Maitland advises that Top Cart, 
LLC's proposal was rejected prior to evaluation for failure to 
meet the Minimum Qualification Requirements 4 . As shown 
in Attachment IV, Smarte Carte received a total of 83.5 
points versus 70.2 points for Airport Carts, LLC. 

Attachment IV, provided by the Airport, is a summary of the 
panel members' evaluation of the written proposals and the 
practical demonstrations from Smarte Carte, Inc. and 
Airport Carts, LLC. The three panelists, all of whom are 
Airport employees, were the Assistant Deputy Director Duty 
Manager, the AirTrain Manager and the Principal Property 
Manager. 

8. Ms. Maitland advises that the costs of the subject 
Agreement were included in the Airport's FY 2001-2002 
budget. 

9. Approval of the proposed Agreement is a policy matter for 
the Board of Supervisors because (a) the Airport can exercise 
up to five, one-year extensions without subsequent Board of 
Supervisors approval; (b) the annual cost of providing free 
luggage carts under the Customs Program increases over the 
five-year period of the subject Agreement and continues to 
increase over the five, one-year Agreement extensions 
options; (c) the annual cost of providing free luggage carts 
under the Customs Program increases over the five-year 



4 Top Cart LLC proposed as Top Cart SFO, a limited liability company that was formed on July 20, 
2001. Pursuant to the RFP requirements, "Proposers will not be permitted to enter into the 
Agreement or perform the Services through a newly-formed entity, including a corporation or limited 
liability company (except that parties may joint venture provided that they satisfy the Minimum 
Qualification Requirements. The parties to the Agreement must be the same person or entity(ies) 
which proposes and satisfies the Minimum Qualification Requirements." 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

16 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

period of the subject Agreement and continues to increase 
over the five, one-year Agreement extensions options, and (d) 
the Airport Director would be authorized to permit an 
increase in the luggage cart rental rates from $2.00 to an 
maximum of $3.00 without further approval by the Board of 
Supervisors. The Budget Analyst notes that the Airport 
Director has recently approved the increased rental rate of 
$3.00 under the existing agreement, effective April 1, 2002, 
and intends to approve such an increased rental rate under 
this proposed agreement if the proposed agreement is 
approved by the Board of Supervisors. 

Recommendation: Approval of the proposed resolution is a policy matter for the 
Board of Supervisors. The Budget Analyst notes that based 
on the inquiries of the Finance Committee at its hearing of 
January 23, 2002 on this matter, the Airport would pay 
Smarte Carte $540,854 less annually based on recent levels 
of free cart usage in the Customs Program. Additionally, the 
Airport would be paid by Smarte Carte increased revenues of 
$112,380 annually or a total of $561,900 over the five-year 
term of the agreement based on Smarte Carte's gross 
revenues in FY 2000-2001. Further, if the proposed 
agreement's provision to permit an increase in the cart 
rental rate from $2.00 to $3.00 is approved, the Airport 

will realize additional revenue based on 25 percent of 
Smarte Carte's increased gross revenues. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

17 



SFO LUGGAGE CART LEASE 



Attachment I 
Page 1 of 4 



Proposal Component 


Existing Agreement 


Old Proposal 


New Proposal 


Free Carts in Customs 


$.70 per cart, peruse, 
(ie: 11/00 to 10/01 
Net Actuals: $981 ,252) 


$2,474,200 annual flat 

fee 


The lower of $1.20 

per cart used 

or 

Service Fee Year 1: 

$2,223,000 

Service Fee Year 2: 
2,336,000 

Service Fee Year 3: 

$2,466,000 

Service Fee Year 4: 

$2,602,000 

Service Fee Year 5: 

$2,744,000 

$12,371,000 for first five- 
year term 

Service Fee Option No. 1: 

$2,775,000 

Service Fee Option No. 2: 

$2,800,000 

Service Fee Option No. 3: 

$2,825,000 

Service Fee Option No. 4: 

$2,850,000 

Service Fee Option No. 5: 

$2,875,000 

(Payable by Airport to 
Smarte Carte 


Rental Car Facility 
Program 


$487,000annually 


$480,000 annually 
prorated on a 360-day 
year until such time as 
AirTrain is operational. 


Rental Car Facility 
Program provided at no 
additional cost. 


AirTrain Contingency 


N/A 

AirTrain not operational 

until Fall 2002 


$7,000 annually 
($500 per day for an 
expected 14 days of 
use per year.) 


Contingency service 
provided at no additional 
cost. 


Cart Rental Rate 


S2 per cart 


$2 per cart 


$3 per cart 


Minimum Annual 
Guarantee 


$225,000 or 16.7% of 
Gross Revenue 
(whichever is greater.) 


$450,000 or 15% of 
Gross Revenue 
(whichever is greater). 


$450,000 or 25% of 

Gross 

Revenue (whichever is 

greater). (Payable by 

Smarte Carte to Airport) 






Attachment I 
Page 2 of 4 

ADDENDUM 

TO 

LEASE AND OPERATING AGREEMENT FOR THE 

LUGGAGE CART PROGRAM AT SAN FRANCISCO INTERNATIONAL AIRPORT 

This Addendum (this "Addendum") is attached to and made part of the Lease and 
Operating Agreement for the Luggage Cart Program at San Francisco International Airport (the 
"Agreement"), and is entered into by and between Smarte Carte, Inc. ("Operator"), and the City 
and County of San Francisco, acting by and through its Airport Commission ("City"). Capitalized 
terms used and not defined herein shall have the meanings given them in the Agreement. 

City and Operator hereby agree as follows: 

1. Modifications . Notwithstanding anything to the contrary in the Agreement, including 
the Summary therein, the Agreement shall be modified as follows: 

1 . 1 Service Fee - Customs Program (Summary. Sec. 12). The Service Fee for the 
Customs Program per Lease Year and/or Option Year shall be the lesser of : 

(a) the product of the number of free Carts actually used by the traveling public 
during such Lease Year and/or Option Year, and One Dollar and 20/00 (SI. 20); or 

(b) the current Lease Year and/or Option Year Service Fee according to the 
following (or the pro-rated portion thereof if the Lease Year and/or Option Year comprises less 
than twelve (12) months, based on a 360-day year): 

Year 1 - Two Million Two Hundred and Twenty Three Thousand Dollars ($2,223,000) 

Year 2 - Two Million Two Hundred and Thirty Six Thousand Dollars (52,236,000) 

Year 3 - Two Million Four Hundred and Sixty Six Thousand Dollars (52,466,000) 

Year 4 - Two Million Six Hundred and Two Thousand Dollars ($2,602,000) 

Year 5 - Two Million Seven Hundred and Forty Four Thousand Dollars (52,744,000) 

Option Year 1 - Two Million Seven Hundred and Seventy Five Thousand Dollars 
($2,775,000) 

Option Year 2 - Two Million Eight Hundred Thousand Dollars (52,800,000) 

Option Year 3 - Two Million Eight Hundred and Twenty Five Thousand Dollars 
(52,825,000) 

Option Year 4 - Two Million Eight Hundred and Fifty Thousand Dollars (52.850,000) 



19 



Attachment I 
Page 3 of 4 

Option Year 5 - Two Million Eight Hundred and Seventy Five Thousand Dollars 
(S2, 875,000) 

In determining the number of free Carts actually used by the traveling public, the parties shall 
utilize the procedures established by the Director from time to time. 

1.2 Service Fee - RAC Program and AirTrain Failure Contingency Plan (Summary. 
Sec. 12) . The Service Fee for the RAC Program and the AirTrain Failure Contingency Plan per 
Lease Year and/or Option Year shall be zero ($0). 

1.3 Maximum Rental Rate (Summary. Ex. B) . The Maximum Rental Rate shall be 
Three Dollars (S3) per Cart; provided that Operator shall be entitled to raise such rental rate with 
the Director's prior consent, which consent may be granted or withheld in Director's sole 
discretion. 

1.4 Base Rent (Summary. Sec. 4 ). The Base Rent shall be: Per Lease Year, the 
greater of: (1) the Minimum Annual Guarantee; or (2) 25% of Gross Revenues. 

1.5 Gross Revenues Definition (Sec. 4.1(a) ). Without limiting the definition of 
"Gross Revenues" in the Agreement, if and when City elects to reduce, modify, or eliminate the 
Customs Program, the RAC Program, and/or the AirTrain Failure Contingency Program, and 
permits Operator to impose a rental charge on Carts provided in the Customs Area and/or the 
Rental Car Facility, all such charge(s) shall be included in the definition of "Gross Revenues." 

2. General Provisions . 

2.1 Agreement . As used herein and in the Agreement, the term "Agreement" shall 
mean the Agreement as modified hereby. In the event of any inconsistency or conflict between a 
term and/or condition of the Agreement and a term and/or condition of this Addendum, the term 
and/or condition in this Addendum shall prevail. 

IN WITNESS WHEREOF, the parties have executed this Addendum as of the Effective Date. 
OPERATOR : Smarte Carte, Inc., a Minnesota corporation 

By: 



Name: 

(type or print) 

Title: 



CITY: CITY AND COUNTY OF SAN FRANCISCO, 
a municipal corporation, 
acting by and through its Airport Commission 



John L. Martin 
Airport Director 



20 



AUTHORIZED BY AIRPORT 
COMMISSION 

Resolution No. 

Adopted: 

Attest: 



Secretary 
Airport Commission 

APPROVED AS TO FORM: 
DENNIS J. HERRERA, 
City Attorney 

By: 

Deputy City Attorney 



G <Bi;DGET_ANALYSTCW> FTNA.NCTFTN ru030ro;-::?l ATTACHME.VT1 DOC 



Attachment I 
Page 4 of 4 



21 



Attachment II 
Pap-e I of. 3 



EXHIBIT A 
PREMISES 



SERIAL 


CMU 


TERMINAL LOCATION 




3622 | C20 Eridgeway b/w North & Old Central Terminal 1 






3613 I 


N01 


Lower level, carousel #15. American Airlines 


4341 | 


N02 I 


Lower level, b/w carousels #1 1 & #14, American Airlines 


4338 I 


N03 


Lower level, b/w carousels #10 & #1 1 , American Airlines 


4334 | 


N04 


Lower level, b/w carousels #5 & #6, United Airlines 


3610 I 


N04A I 


Lower level, b/w carousels #4 & #5, United Airlines 


3548 


N05 


Lower level, b/w carousels #3 & #4, United Airlines by 

others 




4311 | 


N06 


Lower level, b/w carousels #3 & #4, United Airlines 




4308 I 


N07 | 


Lower level, b/w carousels #3 & #4, United Airlines 




4304 | 


N08 I 


Lower level, b/w carousels #2 & #3. United Airlines 




4300 I 


N09 | 


Lower level, b/w carousels #1 & #2. United Airlines 




4301 | 


N010 | 


Lower level, carousel #1 behind teleohones. United Airlines 




4309 I 


N10 


Lower level, curbside, American Airlines 




4292 | 


N11 | 


Lower level, curbside, door #6, United Airlines 




4291 | 


N12 


Lower level, curbside, door #4. United Airlines 




3618 I 


N13 


Lower level, curbside, door #2. United Airlines 




4307 | 


N21 | 


UDoer level, check-in counter, American Airlines 




4310 | 


N22 


Uooer level, chec!<-in counter b/w restrooms, UA & American 




4297 


N23 


Uocer level, check-in counter United Airlines 




4296 


N24 


Uooer level, elevators, United check Doint 




4340 


N25 


Uooer level, elevators, United check point 




4333 


N30 


Uooer level, curbside, American Airlines 


I 
1 


3712 


N31 


Uooer level, curbside, door #9. United Airlines by others 


4277 


N32 


Uooer level, curbside. between door £6 & #7 | 


4313 


N33 


Uooer level, curbside. door #3. United Airlines 1 


4316 


N41 


Boarding Area E. Gate 60. American Airlines 1 


4298 


N42 


Boarding Area E, Gate 62. American Airlines 1 


4204 


N43 


Boarding Area F, rotunda, near restrooms, United Airlines | 


4337 


N44 


Boarding Area F, Gate 83. United Airlines 1 


4336 


N45 


Boarding Area F, Gate 89. United Airlines I 


4274 


N70 


Uooer level. Center Island, in front of American Airlines 


i 
I 


4275 


I N71 


Uocer level. Center Island, in front of United Airlines 


4302 


I S01 


Lower level, baggage claim, in front of elevators. US Air 


I 
1 


4315 


I S02 


Lower level, bacgace claim. Air Canada 


4216 


I S03 


Lov/er level, bacgace claim. Southwest Airlines 1 


4332 


I S04 


Lower level, carousel #6. Continental Airiines 1 


4212 


S05 


Lower level, carousel #7. Continental Airlines 1 


4211 


; so6 


Lower level, carousel #9. America West Airlines 1 


3711 


I S07 


Lower level, carousel #1 3. Alaska Airiines bv others i 


4312 


S08 


Lower level, carousel #16. Delta Airlines 


il 

n 

r| 


4214 


! S09 


Lower level, carouse! #17, Delta Airiines 


4314 


£010 


Lower level, in front of elevator. Delta Airline. 


4083 


S10 


Lower level, curbside, US Ai 



Exhibit A - Pas- 1 



Luggage Car. ProgTam Lease and Operating Agreement 



Attachment II 
Pase 2 ot 3 



44-13 S1 1 Lower level, curbside. Continental Airlines i 




3616 S12 Lower level, curbside. American Trans Air | 




4289 | S13 | Lower level, curbside. Delta Airiines I 




4303 | S31 | UoDer level, curbside. US Air] 




3713 S32 Uooer level, curbside. Southwest Airiines bv others] 




4295 S33 Uooer level, curbside. b/w America Trans Air & Continental I 




3629 S34 Uooer level, curbside, b/w TWA & America West Airiines I 




4293 | S35 | Uooer level, curbside, Alaska Airiines I 




421 3 | S36 Uooer level, curbside. Delta Airlines | 




4294 | S40 Eoarding Area A, Gate 7, US Air | 




4299 | S41 | Boarding Area A entrance to Gates 8-16. US Air | 




4 317 | S42 | Boardinq Area B, Gate 24, TWAl 




4318 | S43 Eoarding Area B. entrance to Gates 32-36, TWA 




3609 | S44 | Boarding Area B, near Gate 23, TWA 




4290 S70 Uooer level. Center Island, in front of Southwest Airiines 




4273 S71 Uooer level, Center Island, in front of TWA 




4424 A61 | Domestic Garage Section A Level 1 




4075 | A62 Domestic Garage Section A Level 2 


4284 | A63 | Domestic Garage Section A Level 3 


4062 B61 Domestic Garage Section B Level 1 


4466 | B62 Domestic Garage Section B Level 2 




4276 | B63 | Domestic Garage Section B Level 3 




5334 | C61 Domestic Garage Section C Level 1 




4279 | C62 Domestic Garage Section C Level 2 




4281 C63 Domestic Garage Section C Level 3 




4280 C65 Domestic Garage Section C Level 5 




4283 I D61 Domestic Garage Section D Level 1 




4288 | D62 | Domestic Garage Section D Level 2 




4287 | D63 Domestic Garage Section D Level 3 




4286 D65 Domestic Garage Section D Level 5 




4797 E51 Domestic Garage Section E Level 1 




5336 E52 Domestic Garage Section E Level 2 1 


4787 E53 Domestic Garage Section E Level 3 1 


4285 | F61 | Domestic Garage Section F Level 1 I 


4080 | F52 | Domestic Garage Section F Level 2 1 


4069 | F53 Domestic Garage Section F Level 3 1 


4077 | F64 | Domestic Garage Section F Level 4 1 


4278 | F55 | Domestic Garage Section F Level 5 1 


5354 | AA-61 I A garage West end Level 1 i 


5353 | AA-62 I A garage West end Level 2 1 


5163 | AA-63 | A garage West end Level 3 


1 


5350 I AA-64 | A garage West end Level 4 


1 


5359 | AA-65 | A garage West end Level E 


1 


4725 | AA-66 | A garage West end Level c 


1 


5352 I AA-67 I A garage West end Level 7 


1 


3520 | AA-63 I A garage West end Level 8 S 


5356 ] AB-61 I A garace Middle Level 1 I 


5358 | AE-52 I A garage Middle Level 2 1 


5360 I A.B-63 I A garace Middle Level 3 1 


5355 I AB-54 I A garace Midcle Level 4 ! 


5357 | AB-65 | A garace Middle Level 5 1 


| 5351 | AE-66 1 A garace Midcle Level 6 1 



Exhibit A - Pas* 2 



Luasas- Car; Program Lease ar.d Oceranna Agreement 



Attachment I_ 

Page 3 or 3 



4794. | AB-57 1 A carace Middle Level 7 1 


5229 1 AB-63 1 A garace Middle Lave! 8 1 




4064 | GS-51 I G carace Level 1 1 


3619 | GS-62 I G carace Level 2 ! 


4205 ] GS-63 I G carace Level 3 ! 


4067 | G3-64 | G carace Level 4 1 


2615 | GB-65 | G carace Level 5 i 


2611 | G8-66 | G carace Level 6 1 


5228 | GB-67 | G carace Level 7 


4282 1 GS-63 I G caraae Level 8 1 




4206 IT-01 Baccace Ci?im room A ricnt side of the entrance I 


2623 IT-02 Bacgaqe Cairn room A facinc the entrance 


3617 IT-03 Baccace Claim room G right side of the entrance I 


2625 17-04 Eacgage Claim room G facinc the entrance i 


5239 IT- 10 Baggage curbside, arrival level I 


5335 IT-1 1 Eaggage curbside. arrival level 


5320 IT-12 Baggage curbside. arrival level 


5331 IT-1 3 Baggage curbside. am'val level ! 


5340 | IT- 14 | Baggage curbside. arrival level I 


5338 IT-1 5 Baggage curbside. arrival level | 


5343 lT-30 Ticketing Curbside. deoarture level I 


5332 1T-31 | Ticketing Curbside, deoarture level i 


5344 IT-32 Ticketina Curbside. deoarture level I 


5345 IT-33 Ticketing Curbside, deoarture level I 


5348 | IT-34 Ticketing Curbside. deoarture level I 


5349 IT-35 Ticketing Curbside. deoarture level 


5347 lT-36 Ticketing Curbside, deoarture level 


5342 IT-37 Ticketing Curbside. deoarture level 


5346 IT-38 Ticketing Island, deoarture level 


5241 it-39 Ticketing Island, deoarture level 


5333 IT-51 Ticketing "G" side facinc elevators 


2549 IT-52 Ticketing "G" side outside Amiock I 


3710 it-70 Courtyard A| 


5337 | IT-71 Courtyard G| 




51020 I C11C | Customs - connectina flicht exit 


99221 IT16A | Customs "A" - Immicraticn Counters 


98221 IT17G I Customs "G" - Immicration Counters 



Exhibit A - Page 3 
Luggage Car. Program Lease and Operative Agreement 



Attachment III 
Page 1 of 6 



Date: March 28, 2002 

To: Ken Bruce, Budget Analysts Office 

From: Patty Maitland. SFIA 

Re: Award of Luggage Cart Lease and Operating Agreement to Smarte Carte, 

Inc. 



Per your request, this provides the revised information originally contained in my memo 
of January 3, 2002 to Maureen Singleton regarding the San Francisco International 
Airport's Luggage Cart Lease and Operating Agreement. 

Current Self-Service Cart Concession Contract. Major Lease Terms Summary 



Premises: 

Term: 

Commencement: 

Expiration: 

Option: 

Use & Operation: 



Self-service luggage cart system, automatic dispensing "vending 
units" and carts available to the public throughout the North, 
South and International Terminal Building Complex, including 
connecting concourses, piers, and boarding areas. 

Five years 

July, 1991 

July, 2001 ' 

Resolution 96-0132, adopted May 21, 1996, exercising option 

period. 

One five-year period exercisable at the sole discretion of the 
Commission. 

Uses Permitted : Exclusive rental of luggage carts by Operator 
throughout Terminal Building Complex, garage and terminal 
roadway sidewalks. At Commission's discretion, carts may be 
provided free of charge in Customs area. Operator installs, 
services and maintains cart in quantities and locations approved 
by Director. 

Operation : Operator to install and operate minimum S8 vending 
units Airport-wide, including Customs area together with 
minimum 2,200 carts. Operator leases vending units to Airport 



1 The Airport Commission determined that it was inadvisable to commence a new luggage 
cart operating system, and one that included braking carts, in the midst of the peak traveling 
season and authorized a month-to-month hold-over of the existing agreement in anticipation 
of a Commencement Date for the new Agreement no later than April 1. 2002. 



25 



Attachment III 
Page 2 of 6 



in accordance with §6.01 of the Agreement. 

All vending unit counters to be set to zero at installation. Carts 
provided in Customs to be distributed through vending units. 

As required by Director, Operator to be present m Customs area 
during scheduled arrival time(s) of each and every International 
flight to assist passengers and make change. 

Luggage carts and vending units to be operational 24 hours 
daily, seven days per week. 



Rental Payment: 



Maintenance & 
Repairs: 

Resolution: 

Lease Modifications 



Fee: 



(a) Operator pays Airport an annual consideration consisting of 
a MAG of 5225,000 or 15% of gross revenue. 

(b) Airport pays Operator SlO.OO/month for each vending unit. 

(c) Airport pays Operator SO. 70 per cart for each cart used with ■ 
the Free Cart in Customs program. 

(d) Airport pays Operator annual flat fee of 5487,000 to provide 
free carts at the Rental Car Facility. 

Operator agrees to maintain and repair any damages caused by 
its Operation. Operator responsible for maintaining all luggage 
carts and vending units in good operating condition. 

No. 91-0021 

Modification #1, Resolution No. 94-0054, May 1, 1994 - 
Redefined gross revenues for the purpose of funding the Free 
Cart in Customs Program. 



Modification #2, Resolution No. 96-0132, May 21, 1996 - 
Increased percentage of gross revenues to be paid as rent to the 
Airport from 15% to 16.7%. Exercised five-year option period. 

Modification #3, Resolution No. 99-01 16, April 20, 1999 - 
Established RAC Free Cart Program at a rate of 5.70 per rental 
car transaction. 



Modification #4, Resolution No. 00-0295, August 15, 2000 - 
Reduced rate paid to Smarte Carte for RAC Free Cart Program 
to annual flat fee of 5487,000 annually. 



Attachment III 
Page 3 of 6 



Current Operations 

Historically, the Airport has paid the Operator for the Free Cart Programs. The Customs 
Program provides free carts to arriving international passengers for the following 
reasons: 1.) SFO is an international gateway, 2.) international passengers arriving at 
SFO possess a higher than average amount of luggage necessitating the use of a luggage 
cart, 3.) arriving international passengers do not usually have the correct type and amount 
of currency to rent a cart, 4.) U.S. Customs officials have repeatedly refused to permit a 
currency exchange service inside the Customs area. 

Under the old agreement, the Airport paid the Operator S.70 per cart used in the Customs 
Program, which amount was included in the "Gross Revenue" calculation of the 
agreement on which the Operator paid rent. Because the U.S. Customs area is a secured 
and closed area, the carts were brought in through a guide-way that contained a counter 
embedded in the floor. The wheels of the carts passed over the counter and registered the 
number of carts brought into the Customs area. The only way a cart would exit the 
secured area was by passenger use. Each month, a representative of the Operator, and a 
member of the Airport's accounting staff, would jointly read the counter for that 
accounting period's billing. This method of counting the luggage carts via the guide-way 
presented significant operational issues for the Airport, the Customs officials, and the 
Operator. The Airport determined that requiring the successful Proposer to commit to 
annual fees would resolve this operational issue and also place the burden of increased 
operational costs over the life of the Agreement on the Proposer, thus, precluding any 
future attempts by the Operator to renegotiate the fee amounts. 

The RAC Program was instituted upon the opening of the Rental Car Facility on 
McDonnell Road. Passengers are bussed from the terminals to the RAC and vice versa. 
The Airport received numerous complaints that passengers had to rent a cart twice, once 
at the terminals and again at the RAC, when using the rental car buses. Unlike the buses, 
the AirTrain will accommodate luggage carts; in the meantime, the Airport perceived this 
as a critical service for passengers going to and from the RAC. Upon commencement of 
AirTrain, this service will cease. : 

The RAC Program was initially tied to the number of car rental transactions per month. 
However, after an audit of the usage showed the Airport was overpaying for this service, 
the S.70 per rental car transaction fee was renegotiated to a flat annual fee of S4S7,000 
and the SI 38,000 in overpayments under the transaction methodology was credited back 
to the Airport. 



2 The Airport anticipates the Commencement of the proposed Agreement on April 1, 2002. 
Per the Agreement: "To the extent the RAC Program operates less than the first full Lease Year, then 
the Service Fee for the RAC Program for such Lease Year shall be prorated, based on a 360-day year " As 
the AirTrain will go on-line on August 10. 2002. the Airport will pay only 131 days of the RAC Program 
Fee(S174,66"). 



27 



Attachment III 
Page 4 ol 5 



Finally, the AirTrain Failure Contingency Program is a contingency plan in the event 
the AirTrain during its regular operation fails, and the Airport must bus passengers to the 
RAC. The AirTrain Failure Contingency Program has not previously existed. 



Historical Financial Data 

The attached spreadsheets (which were included as source documents in the RFP) show 
the overall financial reporting for the luggage cart concession from 1996 through March 
2001. 



Proposed Lease and Operating Agreement 

The proposed Luggage Cart Lease and Operating Agreement (Agreement) as amended 
comprises two major parts: (1) the operation of the luggage cart rental program as a 
concession, making the Carts available for rent at $3 3 per cart for the traveling public, 
and paying to the Airport concession rent; and (2) the provision to the Airport, for a fee, 
the Customs Program, the RAC Program, and the AirTrain Failure Contingency Program 
(the "Services") as described below. Under the proposed Agreement, Smarte Carte, Inc. 
would provide (a) the operation of a fleet of not less than 5,500 luggage carts, equipped 
with brakes 4 , (b) the installation, maintenance, and repair, of the luggage carts, (c) the 
installation, maintenance, and repair of luggage cart vending units, which automatically 
dispense luggage carts to the public; (d) the operation of the Luggage Cart Program 
including the collection and relocation of luggage carts; and (e) the provision of the 
Services. Exhibit A of the Agreement is a list of current rental cart locations at the 
Airport Terminal Complex. 

SERVICES: 

(1) Customs Program . Smarte Carte, Inc. must provide no less than two 
thousand (2,000) luggage carts in the U.S. Customs area of the 
International Terminal. The luggage carts will continue to be available 
without a rental charge in the Customs area 

(2) RAC Program . Smarte Carte, Inc. must provide no less than five hundred 
(500) luggage carts at the Rental Car Facility until AirTrain is operational 
and open to the public for transport to the Rental Car Facility. The luggage 
carts will continue to be available without a rental charge in these areas 



3 Effective April 1, 2002. the Director authorized the increase of the cart rental rate from 
S2.00 to S3. 00. 

4 The terms of the proposed Agreement require Smarte Carte to equip the luggage carts with 
brakes. Existing self-service luggage carts do not have brakes. Smarte Carte will either 
equip their existing fleet of luggage carts with breaks or manufacture new carts with brakes 
in order to meet the terms of the Agreement. 



28 



Attachment III 
Page 5 of 6 



(3) AirTrain Failure Contingency Plan . Smarte Carte, Inc. must provide no 
less than five hundred (500) luggage carts at the Rental Car Facility upon 
notification from the Airport that there is or may be an AirTrain failure, 
and buses must be used to transport passengers from the Terminal 
Building Complex to the Rental Car Facility. Smarte Carte, Inc. must 
provide luggage carts in the Rental Car Facility free of charge until the 
AirTrain service resumes or as otherwise directed by Airport Director. 



Request for Proposal Process and Respondents 

The Airport Commission awarded the Agreement to Smarte Carte Inc., based on a three- 
member panel's determination via written proposal and practical demonstration that 
Smarte Carte offered the best overall program and is responsive and responsible. 
Proposals were received from the three firms listed below. However, Top Cart, LLC's 
proposal was rejected prior to evaluation for failure to meet the Minimum Qualification 
Requirements. 5 

Smarte Carte, Inc. 

Airport Carts, LLC. 

Top Cart, LLC 

Attached is a summary of the panel members' evaluation of the written proposals and the 
practical demonstrations. Please note that the scores of the panel members are a matter of 
public record, however, the evaluating panel members are anonymous (anonymity of 
panel members safeguards against undue influence being brought to bear on the 
evaluation process). 

The Request for Proposal (RFP) did not require a Proposer to submit its methodology as 
to how the financial component was derived, however, Smarte Carte has provided the 
Airport with additional information as set forth in the following section. As the RFP 
process is a competitive one, and the financial component is one of the areas evaluated, 
the Proposer bears the risk of the cost estimation. The Minimum Qualification 
Requirements ensure that a Proposer is sufficiently sophisticated to accurately project its 
future financial requirements. 



1 Top Cart LLC proposed as Top Cart SFO. a limited liability company that was formed on 
July 20, 2001. Pursuant to the RFP requirements, "Proposers will not be permitted to enter 
into the Agreement or perform the Services through a newly-formed entity, including a 
corporation or limited liability company (except that parties may joint venture provided that 
they satisfy the Minimum Qualification Requirements. The parties to the Agreement must 
be the same person or entity(ies) which proposes and satisfies the Minimum Qualification 
Requirements." 



29 



Attachment III 
Page 6 of 6 



Delta Between the Existing and Proposed Agreement Amounts 

MAG and Percent of Gross Revenue Delta 

The function of a MAG is to ensure a certain rent threshold to the Airport; 
the percentage of gross revenue allows for the Airport to participate in periods of 
higher rental activity. The MAG proposed by Smarte Carte is double the existing 
MAG. This high MAG places the risk of low revenues (i.e. low cart rentals) on 
the Operator. 



Program Services Fee Delta 

In general, Smarte Carte cites the following two items as being primary 
factors in determining its fee proposal: 

Smarte Carte has stated that because the proposed Agreement triggers the 
Minimum Compensation Ordinance (MCO) 6 , their labor costs are significantly 
increased over the term of the Agreement. Smarte Carte has given the Airport an 
unofficial estimate of approximately SIM for the first Lease Year in increased 
payroll costs. This estimate is based on a work force of between 100 and 120 cart 
associates, currently paid on average at $.75 over the federal minimum wage, 
working three 8-hour shifts. 

Additionally, Smarte Carte is required to provide carts with a braking 
mechanism in order to satisfy the specifications of the proposed Agreement. 
Either retro-fitting existing equipment, or manufacturing new carts to meet this 
specification represents a significant capital investment by the Operator not 
previously required by the old Agreement. 



Utilities and Janitorial Services 

In accordance with §8.2 Utility Costs of the Agreement, Smarte Carte shall pay the whole 
cost of the utility services required to perform under the Agreement. Although the 
Proposers were not required to provide their operating budget in their responses, I 
requested that Smarte Carte provide their utility cost projections, however, Smarte Carte 
has not finalized its budget. Additionally, janitorial services are not broken out as a line 
item of their budget as their employees perform this function as a part of their regular 
duties. The Operator will most likely be subcontracting their janitorial services out in 
order to meet the M/WBE goals required in the Agreement. 



C:\windowsTE.MP.-ME00003doc 



6 MCO requires contractors with the City and County of San Francisco to minimum gross 
hourly compensation of S10.00 an hour beginning January 1. 2002, plus 2.5% annual 
increases for each of the next three vears. 



30 



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33 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 3 -File 02-0251 

Note: This item was continued by the Finance Committee meeting of March 20, 
2002. 



Department: 
Item: 

Amount: 
Source of Funds: 



Budget: 



Description: 



Department of the Environment (DOE) 

Hearing to consider the release of reserved funds for the 
Department of the Environment in the amount of 
$104,300 for professional services. 

$104,300 

Public Utilities Commission funds work-ordered to the 
Department of the Environment. Such funds were 
previously appropriated and reserved by the Board of 
Supervisors in the Department of the Environment's 
Fiscal Year 2001-2002 budget. According to Ms. Ann Kelly 
of the DOE, the reserved funds were workordered from 
the PUC to the DOE in the FY 2001-2002 budget due to 
the DOE's expertise in providing energy conservation 
services for the City. 

A summary budget of the subject $104,300 for the 
following energy-related projects to be performed by two 
outside consultants, Brown, Vence, and Associates and 
Hellmuth, Obata, & Kassabaum, is as follows: 



Project 

Multifamily Green 
Building 

Solar Market Study 

Residential Energy- 
Conservation Ordinance 

Commercial Energy 

Conservation Ordinance 

Electricity Resource Plan 

Energy End-Use Study 
Total 



Estimated Hourly 



Hours 

122 
332 



Rate 

$114.50 
$114.50 



144 $104.75 



192 
48 
115 
953 



$104.75 
$105.75 
$104.75 



Total 

$13,969 
38,014 

15,084 

20,112 

5,076 

12,046 

$104,301! 



The Board of Supervisors previously appropriated and 
placed on reserve $119,300 m the FY" 2001-2002 budget of 
the DOE. The funds are for professional services to 



1 The total contract amounts for the six projects sum to S104.301. Ms. Kelly advises that DOE will 
fund the $1 difference from other sources. 

Board of Supervisors 
Budget Analyst 

34 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

conduct energy-related projects, and were reserved 
pending submission to the Finance Committee of a) a 
specific description of the energy projects, b) selection of 
consultants to assist the DOE with energy planning, and 
(c) the consultant's estimated hours and hourly rates. 

In December of 2001, the Board of Supervisors released 
$15,000 (File 01-2028) of the $119,300 previously placed 
on reserve to fund the completion of the Climate Change 
Action Plan, resulting in the remaining balance of 
$104,300. The DOE is now requesting the release of the 
remaining $104,300 to be used for the following energy 
resource projects: (a) Multi-family Green Building; (b) 
Solar Market Study; (c) Residential Energy Conservation 
Ordinance; (d) Commercial Energy Conservation 
Ordinance; (e) Electricity Resource Plan: and (f) Energy 
End-Use Study. Attachment I, provided by DOE provides 
descriptions of these energy-related projects. 

The $104,300 would be used to fund contracts with two 
outside consultants selected through a Request for 
Proposals (RFP) process: (a) Brown, Vence, and Associates 
and (b) Hellmuth, Obata, & Kassabaum. Attachment II, 
provided by DOE provides details on the RFP process. As 
detailed in Attachment II, the process consisted of: (a) 
RFPs being sent to 75 firms; (b) the DOE received 10 
proposals; (c) a panel evaluated and scored the 10 
proposals on predetermined criteria of firm experience, 
personnel experience, added value and fees; (d) a panel 
interviewed the firms scoring above 70 points on the 100 
point scale; and (e) three firms were chosen for energy 
consulting projects based on the interviews. See Comment 
No. 2 with respect to the third firm. As shown in 
Attachment II, Brown, Vence, and Associates, Hellmuth. 
Obata, & Kassabaum and one other consultant, ICF 
Consulting, (see Comment No. 2) received the highest 
scores of the competing firms. 

Comments: 1. Ms. Kelly reports that Hellmuth, Obata. & Kassabaum 

will be contracted to work on the following projects for a 
total contract amount of $51,983: (a) the Multi-family 
Green Building for $13,969; and (b) the Solar Market 
Study for $38,014. Ms. Kelly further states that Brown. 

Board of Supervisors 
Budget Analyst 

35 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Vence & Associates will be contracted to work on the 
following projects with a total contract amount of $52,318: 
(a) the Residential Energy Conservation Ordinance for 
$15,084; (b) the Commercial Energy Conservation 
Ordinance for $20,112; (c) the Electricity Resource Plan 
for $5,076; and (d) the Energy End-Use Study $12,046. 

2. As stated in Attachment II, DOE has also selected ICF 
Consulting for contract services through the same RFP 
process. Ms. Kelly reports that DOE will request separate 
approval from the Finance Committee for the release of 
reserved funds in the amount of $97,500 for that contract, 
(see File 02-393) 

Recommendation: Approve the requested release of reserved funds in the 

amount of $104,300. 



Board of Supervisors 
Budget Analyst 

36 



Attachment I 
DEPARTMENT OF THE ENVIRONMENT 

Consultant Tasks FY01-02 
Energy Resource Projects 



Multi-family Green Building. Contractor will provide direct technical assistance to non- 
profit developers currently designing multi-family housing subsidized through the 
Mayor's Office of Housing. 

Solar Market Study. Contractor will develop customer profiles. Using City 
information sources and information from existing solar programs, the dimensions of the 
pool of potential customers will be estimated. Specific potential customers will be 
identified to the extent possible. Financial models will be developed for prioritized 
customer profiles. 

Residential Energy Conservation Ordinance (RECO). Contractor will analyze at least 
six new energy efficiency measures for the RJECO in terms of cost effectiveness. The 
measures will include: R-30 ceiling insulation, wall insulation, duct sealing, blower door 
testing, air sealing and caulking, minimum furnace efficiency, and minimum refrigerator 
efficiency. 

Commercial Energy Conservation Ordinance (CECO). Contractor will review 
existing energy efficiency measures and recommend amendments. Contractor will 
analyze at least five new energy efficiency measures for cost effectiveness including: 
occupancy sensors, low flow water devices, efficiency modifications to existing HVAC 
equipment, high efficiency refrigeration equipment, and peak load management controls. 

Electricity Resource Plan. Contractor will determine specific numbers to be used in the 
City's objectives for attaining the goals set in the Electricity Resource Plan to be 
presented to the Board of Supervisors. Objectives include the amount of electricity to be 
generated from renewable energy and cogeneration sources, number of megawatts saved 
through energy efficiency, decrease in power plant emissions, and cost estimates. 
Consultant tasks will be more firmly defined following public hearings on the Plan to be 
held next week. 

Energy End-Use Study Contractor will segment the market and using available end use 
information develop profiles for each market segment. This will include a peak 
electricity load profile as well as a breakdown of the primary' end uses per market 
segment fur both electricity and natural gas. Market segments will be analyzed for 
various electric peak load reduction opportunities including: controls, load shifting, and 
replacement with high efficiency equipment 



^-j Source: DOE 




Attachment II 
Page 1 of 6 



SF Environment 




WILLIE L. BROWN, JR. 
Mayor 

JARED BLUMENFELD 
Director 



March 7, 2002 



TO: 



FROM: 



Mr. Harvey Rose, Budget Analyst 
Ann Kelly, Senior Energy Specialist 



SUBJECT: The RFP Process for Energy Technical Assistance 

This memo is in response to an email request from Sarah Graham to David Assmann on 3/4/02 regarding the 
release of reserves for energy projects. The information below and in attachments A-D address the first item in the 
request: an explanation of the RFP process. Information for items (2) a complete budget, and (3) a description of 
projects, will be forthcoming. 

An RFP for Energy and Resource Efficiency Consulting Assistance was issued by the Department of the 
Environment on December 10, 2001. The RFP was posted on the web site that day and a notice sent to over 75 
parties over the next few days. Requests from other parties were met as they were received. A pre-proposal 
conference was held for bidders on December 1 8. Nineteen persons attended, representing 1 7 consulting firms. 
Attendance was not a prerequisite for submitting a bid. Ten proposals were received by the due date of January 1 8. 
One proposal was disqualified when a section of the proposal arrived after the deadline. 

The RFP stated that the department was seeking to engage up to three firms to provide as-needed research, energy 
engineering, technical analysis, policy, and program design and implementation support. These tasks covered 
assistance that would be needed in the department to support several programs, including Green Building, Solar, 
Residential and Commercial Energy Codes, Small Business "Power Savers" program, and an energy profile study 
of San Francisco building types. While each of these programs is different and has specific goals, they share 
similar research and technical support requirements. The intent of this RFP was to enable the department to 
manage programs more cost effectively by entering into contracts with several firms who could perform tasks that 
overlap program areas and that would need support simultaneously. Monitoring and verification work intended for 
the Power Savers Program was included in this RFP. A request for release of the $97,500 set aside for that purpose 
will be sent to the Budget Analyst shortly. 

A panel of three reviewers was set up to evaluate and score the proposals, using a predetermined set of criteria that 
had been spelled out in the RFP. Each of the criteria was assigned a designated number of points totaling 100 
(Attachment A). The RFP indicated that the top 5 proposers receiving scores greater than 70 points would be 
invited to an oral interview. The results of the panel's scoring are shown in Attachment B. 

One of the criteria was fees, which was assigned 20 points. All bidders were provided a fee worksheet with a list of 
12 job classifications and hours representative of a task they might be asked to perform. (Attachment C). This was 
done to create an even playing field and to prevent gaming for lowest bid status. 

Only four consulting firms scored above 70 points. They were interviewed on January 30 and 31 by the three 
reviewers plus one other panelist. Each finalist was asked the same set of eight questions, which they had received 
prior to the interview. They were also asked to respond to a ninth question of which they had no prior knowledge. 
Each question was assigned 10 points, for a total of 90 points. All interviews were limited to 90 minutes. The 
results of the interview scores are in Attachment D. Three consulting firms were chosen based on the interview 
scores: Brown, Vence. and Associates (BVA), Hellmuth, Obata & Kassabaum (HOK), and ICF Consulting. 



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40 



ATTACHMENT B 

SCORES & RANKING OF PROPOSALS 



A Uachment .il 
Page4 of 6 



TECHNICAL RFP PROPOSAL SCORES 



GARY OTO 












Average Values 




BVA 


28 


34 


11.5 


7 


80.5 


BVA 


76.83 


NA 


26 


32 


12.34 


4 


74.34 


NA = 


59.34 


ICF 


25 


30 


12.29 


4 


71.29 


ICF 


78.29 


Nexant 


24 


30 


12.47 


2 


68.47 


Nexant = 


62.80 


HOK 


21 


30 


10.47 


2 


63.47 


HOK 


74.80 


Mazetti 


21 


26 


12.8 


2 


61.8 


Mazetti = 


74.13 


AESC 


20 


24 


15.14 





59.14 


AESC 


60.81 


PECI 


18 


20 


14.36 





52.36 


PECI 


51.03 


Digital 


18 


20 


20 





58 


Digital = 


56.67 


Stella* 


10 


12 








22 


Stella 


15.67 


'DISQUALIFIED 
















ANN KELLY 












Ranking 




BVA 


27 


33 


11.5 


7 


78.5 


ICF 


78.29 


NA 


22 


30 


12.34 


2 


66.34 


BVA 


76.83 


ICF 


24 


30 


12.29 


5 


71.29 


HOK 


74.80 


Nexant 


25 


30 


12.47 


5 


72.47 


Mazetti 


74.13 


HOK 


22 


30 


10.47 


8 


70.47 


Nexant 


62.80 


Mazetti 


22 


30 


12.8 


3 


67.8 


AESC 


60.81 


AESC 


23 


30 


15.14 


5 


73.14 


NA 


59.34 


PECI 


20 


25 


14.36 


2 


61.36 


Digital 


56.67 


Digital 


20 


25 


20 


2 


67 


PECI 


51.03 


Stella 

















Stella 


15.67 



PETER O'DONNELL 



BVA 

NA 

ICF 

Nexant 

HOK 

Mazetti 

AESC 

PECI 

Digital 

Stella 



25 


30 


11.5 


5 


71.5 


10 


15 


12.34 





37.34 


30 


40 


12.29 


10 


92.29 


15 


20 


12.47 





47.47 


30 


40 


10.47 


10 


90.47 


30 


40 


12.8 


10 


92.8 


15 


15 


15.14 


5 


50.14 


10 


15 


14.36 





39.36 


10 


15 


20 





45 


10 


15 








25 



41 



Source: DOE 



ATTACHMENT C 

TECHNICAL ASSISTANT PROPOSAL 
FEE WORKSHEET 



Attachment II 
Page 5 of 6 



Position 

Manager 

Senior Engineer 

Associate Engineer 

Architect 

Project/Construction Manager 

Auditor 

Data Analyst 

Marketer 

Researcher/Writer 

Junior Professional Staff 
Administrative 

Clerk 
TOTAL 



Estimated Hours 
(as a percentage 
of sample project) 



Rate/hr 



Total 



5 

15 

15 

4 

5 

10 

7 

7 

7 

15 

5 



100 



42 



ATTACHMENT D 



Tech Proposals Interview Scores 



CAL BROOMHEAD 



Q1 



Q2 Q3 Q4 Q5 



Q6 



Q7 



Q8 



Q9 



Attachment II 
Page 6 of 6 



TOTAL 



BVA 
ICF 
HOK 
Mazetti 



10 


8 


10 


9 


10 


10 


9 


9 


10 


8 


8 


6 


6 


6 


9 


9 


6 


9 


10 


2 


3 


3 


10 


5 


5 


7 


5 


8 


8 


7 


2 


5 


5 


3 


5 


7 



85 
67 
50 
50 



GARY OTO 



BVA 

ICF 

HOK 

Mazetti 



9 
10 
10 



10 



10 






9 


9 


9 


9 


84 


7 


10 


10 


8 


10 


79 


9 


8 


8 


8 


8 


75 


7 


7 


7 


7 


7 


67 



PETER O'DONNELL 



BVA 


10 


8 


10 


8 


8 


ICF 


8 


5 


8 


8 


6 


HOK 


10 


7 


5 


8 


10 


Mazetti 


7 


5 


8 


3 


3 


ANN KELLY 












BVA 


9 


8 


10 


8 


9 


ICF 


8 


8 


7 


7 


7 


HOK 


9 


9 


7 


7 


10 


Mazetti 


6 


7 


6 


2 


6 



7 

10 

5 

5 



71 
64 
60 

43 



76 
68 
73 
49 



AVERAGE SCORES 



BVA 


79 


ICF 


70 


HOK 


64.5 


Mazetti 


52.25 



43 



Source: DOE 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Item 4 - File 02-0393 

Department: 

Item: 

Amount: 
Source of Funds: 

Budget: 



Description: 



Department of the Environment (DOE) 

Hearing to corsider the release of reserved funds for the 
Department of the Environment in the amount of $97,500 
for professional services. 



$97,500 

Previously reserved grant funds from 
Public Utilities Commission (CPUC). 



the California 



A budget for the subject $97,500 for the monitoring and 
verification services portion of the Power Boosters 
Program, to be performed by an outside consultant, ICF 
Consulting, is as follows: 



Estimated Hourly 



Hours 



Rate 



Total 



Design monitoring systems 


58.33 


$90 


$5,250 


Set up monitoring systems 


100 


90 


9,000 


Data collection 


400 


90 


36,000 


Data analysis 


275 


90 


24,750 


Draft report 


150 


90 


13,500 


Final report 


100 


90 


9.000 


Total 


1083.33 




$97,500 



The Power Boosters Program is designed to help small 
business owners improve energy efficiency, thus reducing 
their own energy costs. Under the Power Boosters 
Program, energy efficiency audits of small businesses are 
to be conducted and then technical assistance is to be 
provided for improving the energy efficiency of 
participating businesses. The Board of Supervisors 
previously approved $7,800,000 for the Power Boosters 
Program in August of 2001 from CPUC grant funds and 
placed $7,258,920 of the grant funds on reserve, pending 
submission of budget details and selection of contractors. 
In February of 2002, the Finance Committee released 
$4,461,317 of the $7,258,920 previously placed on reserve, 
resulting in a remaining balance on reserve of $2,797,603 
(File 01-1774). The subject release of reserved funds in 

Board of Supervisors 
Budget Analyst 

44 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Comments: 



Recommendation: 



the amount of 597,500 would fund the monitoring and 
verification of the Power Boosters Program, which is a 
requirement of the CPUC grant. 

1. Attachment I, provided by the DOE provides details on 
the RFP process. As detailed in the Attachment, the 
process consisted of: (a) RFPs being sent to 75 firms; (b) 
the DOE received 10 proposals; (c) a panel evaluated and 
scored the 10 proposals on predetermined criteria of firm 
experience, personnel experience, added value and fees; 
(d) a panel interviewed the firms scoring above 70 points 
on the 100 point scale, which were Brown, Vence, and 
Associates, Hellmuth, Obata, & Kassabaum, ICF Consulting, 
and Mazetti; and (e) three firms were chosen for energy- 
consulting projects based on the interviews. As stated in 
Attachment I, the firms submitted a fee worksheet, which 
was used to determine the average rates for a typical task 
and accounted for 20 points on the 100 point scale. 
According to Ms. Kelly, the four finalists included the 
following average hourly rate amounts in their proposals: 

• Brown, Vence, and Associates - $104.20 per hour 

• Hellmuth, Obata, & Kassabaum - $114.50 per hour 

• ICF Consulting - $97.58 per hour and 

• Mazetti - $93.65 per hour. 

As shown in Attachment I, the three firms receiving the 
highest scores were: ICF Consulting, Brown, Vence, and 
Associates, and Hellmuth, Obata, & Kassabaum. ICF 
Consulting was selected to provide monitoring and 
verification services in order to verify savings and to 
determine cost effectiveness of the energy efficiency 
projects completed under the Power Boosters Program. 
Brown. Vence, and Associates, and Hellmuth, Obata, & 
Kassabaum were selected to conduct energy-related 
projects (see File 02-0251). 

2. Attachment II, provided by the DOE, explains the 
objectives of the monitoring and verification contract and 
explains the tasks to be performed by ICF Consulting. 

Approve the requested release of reserved funds in the 
amount of $97,500. 



Board of Supervisors 
Budget Analyst 

45 




Attachment I 



SF Environment 




WILLIE L. B 
Mayor 

JARED BLUMENFELD 
Director 



March 20, 2002 

TO: Mr. Harvey Rose, Budget Analyst 

FROM: Ann Kelly, Senior Energy Specialist 

SUBJECT: The RFP Process for Monitoring and Verification Contract 

An RFP for Energy and Resource Efficiency Consulting Assistance was issued by the Department of the 
Environment on December 10, 2001. The RFP was posted on the web site that day and a notice sent to over 75 
parties over the next few days. Requests from other parties were met as they were received. A pre-proposal 
conference was held for bidders on December 18. Nineteen persons attended, representing 17 consulting firms. 
Attendance was not a prerequisite for submitting a bid. Ten proposals were received by the due date of January 18. 
One proposal was disqualified when a section of the proposal arrived after the deadline. 

The RFP stated that the department was seeking to engage up to three firms to provide as-needed research, energy 
engineering, technical analysis, policy, and program design and implementation support. These tasks covered 
assistance that would be needed in the department to support several programs, including Green Building, Solar, 
Residential and Commercial Energy Codes, Small Business "Power Savers" program, and an energy profile study 
of San Francisco building types. While each of these programs is different and has specific goals, they share 
similar research and technical support requirements. The intent of this RFP was to enable the department to 
manage programs more cost effectively by entering into contracts with several firms who could perform tasks that 
overlap program areas and that would need support simultaneously. Monitoring and verification work intended for 
the Power Savers Program was included in this RFP. Six other energy resource projects were also included in the 
same RFP. 

A panel of three reviewers was set up to evaluate and score the proposals, using a predetermined set of criteria that 
had been spelled out in the RFP. Each of the criteria was assigned a designated number of points totaling 100. The 
RFP indicated that the top 5 proposers receiving scores greater than 70 points would be invited to an oral 
interview. 

One of the criteria was fees, which was assigned 20 points. All bidders were provided a fee worksheet with a list of 
12 job classifications and hours representative of a task they might be asked to perform. This was done to create 
an even playing field and to prevent gaming for lowest bid status. 

Only four consulting firms scored above 70 points: (a) Brown, Vence, and Associates, (b) Hellmuth, Obata, & 
Kassabaum, (c) ICF Consulting, and (d) Mazetti. These four firms were interviewed on January 30 and 31 by the 
three reviewers plus one other panelist. Each finalist was asked the same set of eight questions, which they had 
received prior to the interview. They were also asked to respond to a ninth question of which they had no prior 
knowledge. Each question was assigned 10 points, for a total of 90 points. All interviews were limited to 90 
minutes. ICF Consulting was selected for the subject $97,500 monitoring and verification contract for the Power 
Savers Program. 



46 

i f- 



Department of the Environment, Citvr and County* of Sac 
TeCephane: (4T5>:c^3E?Qa * Fax: (4t5£554-6393» 1 f drove Street, Sarr Francfsca, CA94t( 

~ onrnentcam 



'JUi '-'..r. Ur-V-'. :.■£-". '- ^ . r - V" .*-- 




Attachment II 



SF Environment 




WILLIE L. B 
Mayor 

JARED BLUMENFELD 
Director 



March 21, 2002 

TO: Mr. Harvey Rose, Budget Analyst 

FROM: Ann Kelly, Senior Energy Specialist 

SUBJECT: Project Description for Monitoring and Verification of Power Savers Program 

The Department of Environment's Power Savers Program is an energy efficient lighting program funded by the 
California Public Utilities Commission (CPUC). The S7.8 million program involves energy audits and lighting 
retrofits in small businesses in San Francisco that will result in a savings of 6 megawatts of electric power. 

The CPUC requires monitoring and verification (M&V) by an independent third-party evaluator who will prepare 
a report on the savings impact, the process, and the cost-effectiveness of the program. A contractor will be hired to 
conduct the following tasks to meet the M&V requirements: 

Task 1. Desien monitoring systems Contractor will analyze database on business sites that have participated in 
the program and types of lighting retrofits installed to determine: monitoring equipment to be used; number of 
sites necessary to obtain a scientifically credible sampling; information that must be collected to meet CPUC 
requirements; and method of collecting and analyzing data. Selection and/or development of software and design 
of forms and questionnaires will be part of the this task. 

Task 2. Set up monitoring systems . Contractor will install and calibrate monitoring equipment at sites determined 
through data analysis. 

Task 3. Data collection. Contractor will develop a data collection system that includes: energy savings obtained; 
surveys of participating businesses; details of the process from initial contact with the business to installation; 
customer satisfaction; and documentation of costs. 

Task 4. Data analysis Contractor will analyze all data collected and produce an evaluation of all categories of 
information required by the CPUC. 

Task 5. Draft report Contractor will prepare a draft report of their analysis and evaluation for review. 

Task 6. Final report Contractor will revise and resubmit a final version of the report 



47 




■'flr;--Cir-c'\ 




Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 5 - File 02-0404 

Department: Department of Human Resources (DHR) 

Item: Ordinance adopting and implementing Amendment No. 1 

to the FY 2001-2002 through FY 2002-2003 Memorandum 
of Understanding (MOU) between the Municipal 
Executives' Association and the City and County of San 
Francisco by amending Article III.DD to incorporate the 
parties' agreement regarding the Management 
Compensation and Classification Plan. 

Description: The Board of Supervisors approved the MOU between the 

Municipal Executives' Association (MEA) and the City 
and County of San Francisco in June 2001 (File 01-0990). 
The MOU provided for a multi-phase Management 
Compensation and Classification Plan (MCCP) that would 
(a) reclassify approximately 250 management 
classifications, covering 973 positions into 22 broad 
management classifications and (b) establish a new 
compensation scale for these 22 broad management 
classifications. 

Under the subject MOU, the MCCP has two phases. 
Under Phase I, DHR reviewed all 276 Special Assistant 
positions (242.59 FTEs) represented by MEA to determine 
if these positions were classified as exempt or as subject 
to Civil Service procedures. Under Phase I, DHR then 
preliminarily allocated these 276 positions into 22 new 
management classifications effective July 1, 2001 (File 01- 
1818). 

After July 1, 2001, the City and MEA met to discuss 
implementation of Phase II of the MCCP, which would 
reclassify all positions covered by MEA into 18 new 
management classifications. Amendment No. 1 to the 
MOU, which is the subject of this report, would 
implement Phase II of the MCCP. 

Under the proposed Amendment No. 1: 

• MCCP would have 18 broad management 
classifications rather than the 22 broad management 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

48 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



classifications established under Phase 1, as shown in 
Attachment I (see Comment 4). 

Each of the 18 broad management classifications 
would have three pay ranges, Range A, Range B, and 
Range C, which would be open pay ranges replacing 
discrete salary steps with a continuous pay scale. 
Phase I included only Range A with seven salary 
steps. Phase II would eliminate the seven salary steps 
in Range A in favor of an open pay range, only 
restricted by a minimum entiy pay level and a 
maximum pay level, with an approximately 34 percent 
differential between the entry pay level to the 
maximum pay level. Because Range A does not 
contain discrete salary steps within the minimum and 
the maximum pay levels, current MEA employees 
would be placed into Range A at the exact base rate of 
pay that they presently earn in their current 
classification rather than into a salary step that most 
nearly matches their current rate of pay. Employees 
who would be entitled to step increases in their 
current classification would receive an equivalent pay 
increase (approximately 5 percent) on the applicable 
anniversary date for which they would have received a 
step increase prior to their movement into an MCCP 
classification. Although the proposed Range A no 
longer contains seven salary steps, the entry pay level 
for Range A equals Salary Step One for the 
corresponding classification in the FY 2001-2002 DHR 
Compensation Manual and the maximum pay level for 
Range A equals Salary Step Seven for the 
corresponding classification in the FY 2001-2002 DHR 
Compensation Manual. 
i Additionally, Phase II would establish two new ranges, 
Range B and Range C. Range B and Range C are new 
open pay ranges that range by 7.5 percent from the 
entry pay level to the maximum pay level. As shown 
in The Attachment, the rate of pay in Ranges B and C 
exceeds the rate of pay in Range A, and the maximum 
pay rate for Range C is approximately 15.8 percent 
higher than the maximum pay rate for Range A. 
Under the proposed Amendment No. 1. newly hired 
employees could be appointed to Range B or Range C, 
rather than Range A. if DHR determines that 
placement into a higher range is necessary due to (a) 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

49 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

problems with recruitment or retention in the position, 
(b) an unusual or time-limited assignment, or (c) 
required exceptional skills or qualifications for job 
performance. 

Approval of the proposed ordinance would approve the 
proposed Amendment No. 1 to the MOU between the City 
and MEA, (a) implementing Phase II of the MCCP, (b) 
establishing 18 broad management classifications rather 
than the 22 broad management classifications established 
in Phase I, and (c) including a new Range B and Range C 
that did not previously exist. As noted above, the 
maximum pay rate for Range C exceeds the maximum 
pay rate for Range A by 15.8 percent. 

Comments: 1. According to Mr. Geoffrey Rothman of DHR, the MCCP 

is intended to be cost neutral. However, as noted in 
Comment 10, the City can incur higher costs from 
implementation of the MCCP if DHR (a) reclassifies 
existing MEA positions into higher classifications with 
higher rates of pay, or (b) places new employees into 
Range B or Range C based on recruitment problems, or 
special skill requirements. As shown in Attachment II, 
the Controller has reported that "the cost increase 
resulting from this amendment cannot be estimated at 
this time". 

Under Phase II, the entry level and maximum pay rate of 
the 18 new broad management classifications are the 
same as Step One and Step Seven pay rates respectively 
of the corresponding management classifications under 
Phase I. When the 276 Special Assistant positions were 
preliminarily allocated into the new management 
classifications under Phase I on July 1, 2001, they were 
placed at salary steps in the new management 
classifications that equaled their existing salary step. 
Similarly, under the proposed Phase II, all current 
employees covered by MEA would be placed into the 
MCCP at the exact base rate of pay that they presently 
earn in their current classification. 

However, the proposed Phase II also contains two new 
higher pay ranges, Range B and Range C, that do not 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

50 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



currently exist. The maximum pay level of Range C is 
approximately 15.8 percent greater than the maximum 
pay level for Range A. For example, under Phase II the 
maximum biweekly pay level for Class 951 Deputy 
Director I in Range A is $3,241 (or $84,266 annually). As 
shown in Attachment I, Phase II also includes Range B 
and Range C for Class 951 Deputy Director I, which were 
not included in Phase I. The maximum biweekly pay 
level for Range C for Class 951 Deputy Director I is 
$3,752 (or $97,552 annually), which is 15.8 percent 
greater than the maximum biweekly pay level of $3,241 
for Range A. Therefore, by implementing two new salary 
ranges, Range B and Range C, the proposed Amendment 
No. 1 would increase the maximum pay level for each 
classification by approximately 15.8 percent. According to 
Mr. Rothman, new hires would only be placed into Range 
B and C if DHR determines that these positions (a) are 
difficult to recruit for, (b) would require special skills or 
qualifications, or (c) are unusual or time-limited. The 
Budget Analyst notes that such DHR determinations can 
be made without Board of Supervisors approval. 
Additionally, Mr. Rothman states that existing employees 
with current rates of pay equaling Range B or Range C 
pay rates will be placed into Range B or Range C. DHR 
does not currently have an estimate of how many existing 
employees qualify to be placed into Range B and Range C. 

Mr. Rothman states that under Phase II, new employees 
cannot move into a higher salary range than the range in 
which they were originally placed. For example, if a new 
employee is placed into Range A upon hire, the employee 
cannot move into Range B or Range C. However, Mr. 
Rothman advises that some existing employees, who are 
currently at less than Step Five in their current 
classifications 1 and who are placed into Range A at their 
existing rate of pay, will move into Range B or Range C if 
their rate of pay at Step Five in their current 
classification exceeds the maximum pay level for Range A. 

According to Mr. Rothman. and as discussed above, Range 
B and Range C are needed to (a) fill difficult to recruit 
positions, positions requiring special skills, or unusual or 



1 All MEA classifications outside of the MCCP have five salary steps. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

51 



Memo to Finance Committee 

April 3. 2002 Finance Committee Meeting 



time-limited positions, or (b) to place existing employees 
whose current rate of pay exceeds the rate of pay for 
Range A. 

2. As noted previously, because the proposed Range A pay 
scale does not contain discrete salary steps, existing 
employees who are placed into Range A will be placed at 
the exact base rate of pay that they presently earn in 
their current classification. Employees who are entitled 
to step increases in their current classifications will be 
eligible to receive equivalent pay increases 
(approximately 5 percent) on the anniversary date 
applicable to their class pre-MCCP. According to Mr. 
Rothman, the proposed Amendment would limit the pay 
of employees to the top of the pay range (Ranges A, B, or 
C) in which they are placed, except for existing employees 
whose Step Five pay rate in their current classification 
exceeds the maximum pay rate of Range A (as discussed 
in Comment No. 1). 

3. Under the proposed Amendment, all new employees 
will be placed into Range A, unless they qualify for 
placement in Ranges B or C under the criteria noted 
above and as solely determined by DHR. If a new 
employee is placed at the entry pay level for Range A in 
his or her classification, the employee will be eligible for a 
5 percent pay increase after 6 months and after 
completion of each additional year, not to exceed the top 
of Range A. If a new employee is placed at a rate of pay 
that exceeds the entry level for Range A, the employee 
will be eligible for a 5 percent pay increase after 
completion of each additional year, not to exceed the top 
of Range A. 

4. Phase II of the MCCP has 18 broad management 
classifications compared to 22 broad management 
classifications in Phase I. The 22 broad management 
classifications in Phase I included: 

• 12 management classifications (Manager I through 
XII), 

• five deputy director classifications (Deputy Director I 
through V), and 

• five department head classifications (Department 
Head I through V). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

52 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Under Phase II, the four lowest management 
classifications under Phase I (Managers I through IV) will 
be eliminated and the remaining eight management 
classifications will be renumbered as Manager I through 
VIII. Therefore, Phase II will have 18 broad management 
classifications, including: 

• eight manager classifications (Manager I through VIII) 
which are equivalent to Manager V through Manager 
XII classifications under Phase I, 

• five deputy director classifications (Deputy Director I 
through V) which are the same as Deputy Director I 
through V classifications under Phase I, and 

• five department head classifications (Department 
Head I through V) which are the same as Department 
Head I through V classifications under Phase I. 

According to Mr. Rothman, DHR did not allocate any 
positions to Manager I through IV classifications during 
Phase I of the MCCP. Mr. Rothman states that all 276 
Special Assistant positions, which were were 
preliminarily allocated to the MCCP on July 1, 2001, had 
pay rates that exceeded the corresponding pay rates for 
the Manager I through IV classifications, and therefore 
were moved into classifications at the Phase I Manager V 
level or above. 2 Mr. Rothman advises that there are no 
incumbents in the Phase I Manager I through IV 
classifications. 

5. Under the proposed Amendment, participation in the 
MCCP is voluntary for all permanent Civil Service 
employees, because permanent Civil Service employees 
are not subject to changes in their classification status in 
accordance with their collective bargaining agreements, 
pursuant to Charter Section A8. 409-3. If a permanent 
Civil Service employee does not opt-in to the MCCP 
classification, the employee will remain in his or her 
existing classification, but will have the option to 
participate in the MCCP at a later date if the employee 
chooses. If the existing employee vacates the position, the 



2 On September 5, 2001, DHR submitted to the Board of Supervisors a list of all 276 Special 
Assistant positions (or 242.59 FTEs) which were preliminarily allocated to MCCP effective July 1. 
2001. including (a) the Special Assistant classification, (b) the new MCCP classifications, and (c) 
whether DHR designated the position as Civil Service provisional or exempt (see Comment 5). 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

53 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



position will be automatically classified under the MCCP. 
All Civil Service exempt and provisional positions 3 , 
vacant positions and new positions covered by MEA will 
be classified under the MCCP. 

6. According to Mr. Robert Pritchard of DHR, DHR will 
conduct an audit of all MEA positions for reclassification 
into the new MCCP classifications. Mr. Pritchard states 
that under the MCCP classification audit, DHR will 
consolidate approximately 250 separate MEA 
classifications into 18 broad management classifications. 
According to Mr. Pritchard, not all existing MEA 
classifications will be allocated to MCCP. Mr. Pritchard 
advises that MEA classifications that do not perform 
management functions, such as commission secretary or 
executive assistant, will either be classified into a new job 
series or will remain in their existing classification. 

7. According to Mr. Pritchard, DHR will conduct the MEA 
classification audit over approximately 18 months. Mr. 
Pritchard states that DHR will commence the audit in 
approximately mid April 2002, if the proposed ordinance 
is adopted, and will complete the audit in approximately 
October 2003. According to Mr. Pritchard, at the 
completion of the classification audit, DHR will develop 
Civil Service exams for the new MCCP classifications. 
Mr. Pritchard advises that DHR has already notified City 
Departments of their intention to audit MEA positions 
within individual departments and has sent preparatory 
audit materials to some of the departments. DHR will 
begin the audit with MEA positions at the Airport. 

The Board of Supervisors appropriated $400,000 in the 
FY 2001-2002 DHR budget to fund five positions to 
conduct the MCCP classification audit. Two of the five 
positions were hired effective July 1, 2001, and three of 



3 Under Charter Section 10.104. certain City positions, including department heads, commission 
secretaries, and supervisory and policy positions in the Mayor's Office and the Office of the City 
Administrator, are exempt from Civil Service. Additionally, positions are provisional Civil Service if 
they are subject to Civil Service but no Civil Service exam exists. When DHR allocated 276 Special 
Assistant positions to the Phase I MCCP classifications on July 1, 2001, 81 of the 276 positions (29.3 
percent) were designated Civil Service exempt and 195 of the 276 positions (70.7 percent) were 
provisional Civil Service (File 01-1818). Under the City's Administrative Code, DHR must establish 
an exam and test all provisional Civil Service appointments within three years of appointment. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

54 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



the five positions were hired effective August 1, 2001. 
Mr. Pritchard advises that DHR has requested additional 
funding of approximately $400,000 in FY 2002-2003 to 
implement Phase II of the MCCP. The Budget Analyst 
will review such requested funds in the FY 2002-2003 
budget. 

8. Under the Administrative Provisions of the Annual 
Salary Ordinance, Section LIB, the Human Resources 
Director has authority to change the classification of 
positions without obtaining Board of Supervisors 
approval, provided that the rate of pay is equal to or less 
than the existing position. Any reclassification that 
results in a higher rate of pay will be subject to Board of 
Supervisors approval. 

Due to the scope of the MEA classification audit, the 
Budget Analyst recommends that DHR submit a 
quarterly report to the Board of Supervisors detailing the 
current status of the classification audit, which includes: 
(a) a list of the departments and positions which have 
been audited as of the date of the report, (b) the 
preliminary DHR recommendations for reclassifying the 
positions into MCCP classifications, (c) any appeals by 
incumbents in the classifications regarding the proposed 
reclassification, (d) all recommended DHR 
reclassifications resulting in a higher classification and 
increase in pay, (e) all recommended DHR 
reclassifications which will be placed in Range B or Range 
C and the justification for placing the position in Range B 
or Range C, and (f) a timeline for conducting the 
remaining audit. 

Further, the Budget Analyst recommends that DHR 
submit a report to the Board of Supervisors at the 
conclusion of the MEA audit, detailing reclassification of 
the MEA positions into MCCP classifications. Any 
positions resulting in an increase in salary would be 
subject to Board of Supervisors approval. 

9. As noted in Attachment II. the Controller states that 
"Based on the provision that the pay rate for current 
employees will not change and it is difficult to assess the 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

55 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

impact of new appointments, the cost increase resulting 
from this amendment cannot be estimated at this time". 

10. As noted previously, the proposed MCCP is intended 
to be cost neutral. However, the City can incur higher 
costs from implementation of the MCCP if DHR (a) 
reclassifies existing MEA positions into higher 
classifications with higher rates of pay, or (b) places new 
employees into Range B or Range C based on recruitment 
problems, or special skill requirements. Phase II of the 
MCCP includes two new higher pay ranges, Range B and 
Range C, than existed under Phase I, which only includes 
Range A. As stated in Comment 1, the top pay level for 
Range C is 15.8 percent higher than the top pay level for 
Range A. Under Phase II, DHR is only supposed to place 
existing employees into Range B or Range C if their 
current rate of pay equals the Range B or Range C pay 
scale, but DHR, at their own determination, can place 
new employees into Range B or Range C if DHR 
determines that that the position is difficult to recruit for, 
requires special skills, or is unusual or time-limited. 
Further, DHR can reclassify existing MEA positions into 
higher classifications with a higher rate of pay during the 
MEA classification audit, subject to Board of Supervisors 
approval. Because the proposed MCCP could result in 
higher costs to the City, the Budget Analyst considers 
approval of the proposed ordinance to be a policy matter 
for the Board of Supervisors. As noted in Comment No. 9 
above, the Controller has made no cost projections on the 
implementation of the MCCP. 

11. Mr. Rothman advises that the proposed Amendment 
No. 1 to the MOU is Phase II of a multi-phase MCCP. 
According to Mr. Rothman, because the proposed MCCP 
is subject to collective bargaining, changes to the proposed 
MCCP could occur in the successor MOU to this existing 
MOU, which expires June 30, 2003, and that any such 
changes would be subject to Board of Supervisors 
approval. 

Recommendations: 1. Request the Director of Human Resources to submit a 

quarterly report to the Board of Supervisors detailing the 
current status of the classification audit, which includes: 
(a) a list of the departments and positions which have 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

56 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



been audited as of the date of the report, (b) the 
preliminary DHR recommendations for reclassifying the 
positions into MCCP classifications, (c) any appeals by 
incumbents in the classifications regarding the proposed 
reclassification. (d) all recommended DHR 
reclassifications resulting in a higher classification and 
increase in pay, (e) all recommended DHR 
reclassifications which will be placed in Range B or Range 
C and the justification for placing the position in Range B 
or Range C, and (f) a timeline for conducting the 
remaining audit. 

2. Request the Director of Human Resources to submit a 
report to the Board of Supervisors at the conclusion of the 
MEA audit, detailing reclassification of the MEA positions 
into MCCP classifications. 

3. Approval of the proposed ordinance is a policy matter 
for the Board of Supervisors, because the proposed MCCP 
could result in higher costs to the City as noted in 
Comment 10, and because the Controller's Office is 
unable to make cost projections of the proposed ordinance. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

57 



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Attachment II 
| CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLER 

Edward Harrington 
Controller 



March 2S, 2002 

Ms. Gloria L. Young, Clerk of the Board 

Board of Supervisors 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

Re: File Number 020404 

Amendment No. 1 to Memoranda of Understanding (MOU) FY 2001 - 2003 with Municipal Executives' 
Association, MEA 

Dear Ms. Young: 

In accordance with Ordinance 92-94, I am submitting a cost analysis of an amendment to the FY 2001 - 2003 
MOU between the City and County of San Francisco and Municipal Executives' Association, MEA. Amendment 
No. 1 covers the period of the second year of the current MOU, July 1, 2001 through June 30, 2003, and affects 
973.4 budgeted positions with an overall salary base of approximately S9S.7 million. 

The amendment incorporates the parties' agreement regarding the Management Compensation and Classification 
Plan (MCCP). The plan consists of three pay ranges. A, B and C. Range A is a 30% open range, and ranges B and 
C are 7 Vz % open ranges. The Department of Human Resources will place all current employees into the MCCP 
at the exact base rate of pay that they presently earn in their current classifications. New and vacant MEA 
represented positions will be classified into the MCCP. Appointments will be made to any rate in range A. 
However, the amendment provides the ability for the appointing authority to make appointments to range B or C 
if they can demonstrate to the Department of Human Resources that one or more of the following criteria exists: 

• There are recruitment or retention issues associated with the position, 

• The position has an unusual or extraordinary rime-limited assignment, or 

• The position requires exceptional or special skills or qualifications that 
are essential for job performance. 

Based on the provision that the pay rate for current employees will not change and it is difficult to assess the 
impact of new appointments, the cost increase resulting from this amendment can not be estimated at this time. 

If you have any additional questions or concerns please contact me at 554-7500 or Pamela Levjn of my staff at 
554-7554. 




'Edward M. Hamne 
Controller 




Alice Villagomez, ERD 
Harvey Rose, Budget Analyst 

59 



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Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 6 - File 02-0405 

Department: Department of Human Resources (DHR) 

Item: Ordinance approving a settlement and adopting and 

implementing Amendment No. 1 to the FY 2001-2002 
through FY 2002-2003 Memorandum of Understanding 
(MOU) between the International Federation of 
Professional and Technical Engineers, Local 21, and the 
City and County of San Francisco by amending Article 
III.B.l.p to incorporate the parties' settlement of an 
interest arbitration proceeding over wage adjustments for 
professional architect and landscape architect 
classifications. 

Description: Approval of the proposed ordinance would: 

(a) approve a Settlement Agreement between the City and 
the International Federation of Professional and 
Technical Engineers (IFPTE) regarding wage levels for 
Architect and Landscape Architect classifications, and 

(b) adopt Amendment No. 1 to the FY 2001-2002 through 
FY 2003-2004 MOU, establishing a 5.5 percent special 
wage adjustment for Architect and Landscape 
Architect classifications effective July 1, 2002. 

The City and IFPTE submitted the subject MOU to 
arbitration pursuant to Charter Section A8.409. An 
arbitration award was issued on May 22, 2001, and the 
Board of Supervisors adopted the subject MOU in June 
2001. Because the City and IFPTE had not reached 
agreement regarding wage levels for professional 
Architect and Landscape Architect classifications at the 
time of the arbitration award, the arbitrator retained 
jurisdiction over wage levels for these classifications. 
However, the actual Settlement Agreement regarding the 
special wage adjustments for Architect and Landscape 
Architect classifications, which is the subject of this 
ordinance, was reached in February 2002 through 
negotiations between the City and the Union. The 
proposed Settlement Agreement is not an arbitrated 
agreement and therefore, the Board of Supervisors has 
authority to reject this settlement. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

60 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Amendment No. 1 to the subject MOU would grant a 5.5 
percent special wage adjustment to the following 11 
classifications, effective July 1, 2002: 

5260 Architectural Assistant I 

5261 Architectural Assistant II 

5265 Architectural Associate I 

5266 Architectural Associate II 
5268 Architect 

5270 Senior Architect 

5273 Principal Architect 

5262 Landscape Architectural Associate I 
5272 Landscape Architectural Associate II 

5274 Landscape Architect 

5275 Senior Landscape Architect 

Further, the proposed Settlement Agreement between the 
City and IFPTE provides that Architect and Landscape 
Architect classifications would receive the same wage 
increases and adjustments granted to professional 
Engineer classifications represented by IFPTE from July 

1, 2002 through June 30, 2006. Under the Settlement 
Agreement, this provision would sunset after June 30, 
2006. Therefore, the City would be required to agree to 
future wage increases and wage adjustments for 
Architects and Landscape Architects in successor MOUs 
to the subject MOU, which expires June 30, 2003, if the 
City agrees to future wage increases and adjustments for 
professional engineering classifications. 

Comments: 1. Under the existing MOU between the City and the 

IFPTE. all classifications represented by IFPTE 
including the 11 subject Architect and Landscape 
Architect classifications, received a 10 percent wage 
increase over the two-year term of the MOU from July 1, 
2001 through June 30, 2003. Therefore, if the Board of 
Supervisors approves the proposed ordinance, adopting 
Amendment No. 1 to the MOU, the total wage increase for 
Architect and Landscape Architect classifications over the 
two-year term of the MOU would be 15.5 percent (10 
percent wage increase previously granted plus the 
proposed 5.5 percent special wage adjustment). 

2. The subject MOU provides a 5.5 percent special wage 
adjustment (2.5 percent on July 1. 2001 and 3.0 percent 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

61 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



on July 1, 2002) to Engineer classifications but did not 
provide a special wage adjustment to the Architect and 
Landscape Architect classifications. 

3. According to Mr. Geoffrey Rothman of DHR, in FY 
2000-2001 DHR retained a consultant, R and G 
Consultants, at a cost of $80,000 to conduct a market 
wage study of 103 City classifications, including the 
Architect and Landscape Architect classifications. The 
results of the market wage study conducted by R and G 
Consultants indicated that the subject Architect and 
Landscape Architect classifications should not be paid any 
further special wage adjustments. However, Mr. Rothman 
states that in prior MOUs between IFPTE and the City, 
the wage rates of Engineer classifications and Architect 
and Landscape Architect classifications were aligned. 

4. Although DHR retained R and G Consultants to 
conduct a market wage study which concluded that a 
special wage adjustment was not warranted for Architect 
and Landscape Architect classifications, under the 
proposed Settlement Agreement, DHR has agreed to pay 
a special 5.5 percent wage adjustment on July 1, 2002 to 
the Architect and Landscape Architect classifications 
represented by IFPTE to maintain wage parity between 
Engineer classifications and Architect and Landscape 
Architect classifications. Mr. Rothman advises that, 
pursuant to Charter Section A8-409-4, internal wage 
alignments among different City classifications are 
factors in arbitration hearings to resolve wage disputes, 
and that in 1996, there was an arbitration award 
granting parity between the engineering classifications 
covered by IFPTE and the subject Architect and 
Landscape Architect classifications. 

5. Mr. Rothman states that, subsequent to referring the 
matter of the special wage adjustment for Architect and 
Landscape Architect classifications to arbitration, the 
City and the Union reached a negotiated settlement to 
pay the Architect and Landscape Architect classifications 
the same special wage adjustment as paid to the Engineer 
classifications. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

62 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



6. The proposed Settlement Agreement between the City 
and IFPTE would require that the City pay the same 
wage increases and adjustments to Architect and 
Landscape Architect classifications as the City pays to 
professional Engineer classifications represented by 
IFPTE from July 1, 2002 through June 30, 2006. Under 
this proposed Settlement Agreement, the City would not 
have discretion to negotiate special wage adjustments for 
Architects and Landscape Architects independently of 
wage adjustments for engineering classifications in the 
successor MOU to this subject MOU, which expires on 
June 30, 2003. Therefore, even if future market wage 
surveys show that no market rate adjustment is 
warranted for Architect and Landscape Architect 
classifications, the City would be required to offer the 
same special wage adjustment to Architects and 
Landscape Architects as it offers to professional 
engineering classifications in the successor MOU. 

7. The Budget Analyst recommends that the proposed 
ordinance be severed and that the Settlement Agreement 
between the City and IFPTE be considered separately 
from the proposed Amendment No. 1 to the existing MOU 
between the City and IFPTE. 

8. The Budget Analyst considers approval of the proposed 
Amendment No. 1 to the existing MOU to be a policy 
matter for the Board of Supervisors because it provides a 
5.5 percent special wage adjustment to the Architect and 
Landscape Architect classifications based on internal 
wage parity, although the DHR market wage rate study 
did not show that the special wage adjustment was 
justified. 

9. Because the proposed Settlement Agreement limits the 
City's discretion in negotiating wage levels for Architect 
and Landscape Architect classifications in successor 
MOUs, the Budget Analyst recommends that the Board of 
Supervisors request that DHR renegotiate the terms of 
the Settlement Agreement, deleting the provision that 
professional Architect and Landscape Architect 
classifications receive the same future wage increases and 
adjustments granted to the professional Engineer 
classifications from July 2, 2002 through June 30, 2006. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

63 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

According to Mr. Philip Ginsburg of the City Attorney's 
Office, the subject Settlement Agreement (File 02-0405) is 
part of a larger three-way agreement between the City, 
IFPTE, and the Municipal Executives' Association (MEA) 
over several issues, including implementation of the 
Management Compensation and Classification Plan (File 
02-0404, included in this report), and litigation over unit 
assignments and administrative challenges initiated by 
IFPTE (File 02-0406). Mr. Ginsburg advises that under 
the Settlement Agreement reached by the parties, if the 
Board of Supervisors does not approve any part of the 
overall Settlement Agreement, IFPTE and MEA would 
have the right to withdraw from other components of the 
overall Settlement Agreement. 

10. As shown in the Attachment, provided by the 
Controller's Office, the proposed Amendment No. 1 is 
estimated to cost the City $672,440 in FY 2002-2003. 
The Budget Analyst notes that the Settlement Agreement 
provision guaranteeing that Architect and Landscape 
Architect classifications will receive the same future wage 
increases and adjustments granted to the professional 
engineering classifications from July 2, 2002 through 
June 30, 2006 will result in future unknown costs. 

Recommendations: 1. Sever the proposed Settlement Agreement from the 

proposed ordinance and request that DHR renegotiate the 
terms of the Settlement Agreement, deleting the provision 
requiring that professional Architect and Landscape 
Architect classifications receive the same wage increases 
and adjustments granted to the professional Engineer 
classifications in future MOUs. 

2. Approval of the proposed Amendment No. 1 to the 
MOU between the City and IFPTE is a policy matter for 
the Board of Supervisors because it provides a 5.5 percent 
special wage adjustment to the Architect and Landscape 
Architect classifications even though DHR retained an 
outside consultant at a cost of $80,000 with the consultant 
finding that such a special wage adjustment was not 
justified. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

64 




CITY AND COUNTY OF SAN FRANCISCO 



Attachment 
Page 1 of 2 
OFFICE OF THE CONTROLLEF 



Edward Harringtor 
Controllei 



March 26, 2002 

Ms. Gloria L. Young, Clerk of the Board 

Board of Supervisors 

1 Dr. Carlton B. Goodlett Place 

San Francisco, CA 94102 

Re: File Number 020405 

Amendment No. 1 to Memoranda of Understanding (MOU) FY 2001 - 2003 with International 
Federation of Professional and Technical Engineers Local 21 

Dear Ms. Young: 

In accordance with Ordinance 92-94, 1 am submitting a cost analysis of an amendment to the FY 2001 - 
2003 MOU between the City and County of San Francisco and International Federation of Professional 
and Technical Engineers, Local 21. Amendment No. 1 covers the period of the second year of the 
current MOU, July 1, 2001 through June 30, 2003, and affects 130 budgeted positions with an overall 
salary base of approximately $10.9 million. 

The amendment provides a special wage adjustment resulting from the architects' settlement by 
amending Article III.B.lp to incorporate the parties settlement of an interest arbitration proceeding over 
wage adjustments for professional architect and landscape architect classifications. Based on our 
analysis, the amendment will result in incremental costs of approximately 5672,440 in FY 2002-2003. 
The amendment will result in cost increases of approximately 6.2% above base salary in FY 2002-2003. 
Please see Attachment A for specific cost estimates. 

If you have any additional questions or concerns please contact me at 554-7500 or Pamela Levin of my 

staff at 554-7554. 



Sincerely, 



Edward M. Harrington 
Controller 



Alice Villagomez, ERD 
Harvev Rose. Budaet Analvst 



65 



Attachment 
Page l of 2 



Attachment A 

IFPTE Local 21 - Amendment No.1 to FY 2001-2003 MOU 

Estimated Costs FY 2002-2003 

Controller's Office 



Annual Costs/(Savinqs) FY 2002-2003 



Wage Adjustments 

Special wage adjustments for professional architect 

and landscape architect classifications 583,462 



Wage-Related Fringe Increases 88,978 

Total Estimated Incremental Costs $672,440 



Incremental Cost % of Salary Base 6.2% 



66 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Item 7 - File 02-0448 

Department: 

Item: 



Mayor's Office of Housing (MOH) 

Resolution authorizing an application to the California 
Debt Limit Allocation Committee (CDLAC) to permit the 
issuance of Mortgage Credit Certificates. 



Amount: 
Description: 



Not to exceed $20,000,000 

The Mortgage Credit Certificate (MCC) Program is 
designed to assist first-time home buyers in purchasing a 
single-family residence in San Francisco. The program is 
directed toward individuals and families who would not 
be able to purchase housing without receiving some 
financial assistance. 

The MCC Program, which is a State-authorized program, 
provides assistance to first-time home buyers by allowing 
an eligible home purchaser to take an annual credit 
against Federal income taxes of a percentage of the 
annual mortgage interest payments on a single family 
residence or a duplex. The percentage rate is established 
by the entity administering the program locally (in this 
case, the MOH), but may not exceed 50 percent of the 
mortgage interest (see Comment 2). A home buyer who is 
awarded an MCC is eligible for a tax credit on a portion of 
the interest paid on the mortgage, and would also be able 
to deduct the remaining amount of the annual mortgage 
interest payments as an itemized deduction on the home 
buyer's Federal income taxes. By reducing the Federal 
income tax burden, the home buyer is left with increased 
disposable income with which to cover mortgage 
payments. 

In September of 1993 the Board of Supervisors approved a 
resolution creating the City's MCC Program. The MOH 
has been administering the MCC Program since January 
of 1994, and has issued certificates and reservations 1 for a 
total of 923 first-time low and moderate income 



1 According to the MOH, "reservations" arise where the MOH has approved an allocation for a 
Mortgage Credit Certificate, but the Certificate's recipient's mortgage loan has not yet closed escrow. 
MOH reserves the Mortgage Credit Certificate for the intended recipient until closure of escrow and 
call this a "reservation." 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

67 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

homebuyers. According to Ms. Maggie Davis of MOH, to 
date, MOH has received 12 allocations from the California 
Debt Limit Allocation Committee (CDLAC), to issue 
MCCs to 923 first-time buyers for a total mortgage value 
of $132,500,000 (see Comment 4) and MOH has issued or 
reserved that total amount. 

The proposed resolution would authorize the MOH to 
submit an application to the CDLAC, the State agency 
which authorizes the amount of tax-exempt private- 
activity bonds and mortgage credit certificates which can 
be issued by local government agencies, for an additional 
allocation of $20,000,000 in private-activity bond 
authority and converting that private-activity bond 
authority into Mortgage Credit Certificates using the 
Internal Revenue Service's conversion formula, resulting 
in $33,333,333 in Mortgage Credit Certificates. In 
addition, the proposed resolution, in compliance with 
CDLAC regulations, would authorize (a) the City to place 
0.5 percent (one-half of one percent) of the requested 
allocation on deposit, in an amount not to exceed 
$100,000, in connection with the submission of the 
application to the CDLAC, and (b) the Director of the 
MOH to certify to CDLAC that such funds are available. 

Comments: 1. According to Ms. Davis, the required $100,000 deposit 

shall consist of a restriction of cash in the City's Home 
Ownership Assistance Loan Fund, which is cash 
accumulated from loan repayments by individuals 
participating in the City's 1982 First Time Homebuyers 
Bond Program. Ms. Davis states that the above-noted 
deposit is required by CDLAC to ensure that the State 
requirements for issuing the Mortgage Credit Certificates 
are met by the local agency, including the requirement 
that a Mortgage Credit Certificate be issued to a program 
recipient within 90 days of receipt of the allocation of 



2. Ms. Davis reports that, under the application to be 
submitted to the CDLAC, and in accordance with Federal 
Internal Revenue Service (IRS) and CDLAC regulations, 
the MOH will provide assistance to first-time home 
buyers by allowing an eligible home purchaser to take an 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

68 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



annual tax credit against Federal income taxes of up to 15 
percent. 

3. If CDLAC approves the subject proposed MOH 
application for $20,000,000, which as previously noted 
would result in the issuance of $33,333,333 in MCCs, Ms. 
Davis states that the City expects to assist an additional 
approximately 167 home purchasers based on an average 
mortgage amount of $200,000. 

4. Ms. Davis reports that, from 1993 through 2001, the 
Board of Supervisors has approved resolutions 
authorizing the MOH to submit applications to the 
CDLAC, resulting in 12 actual allocations totaling 
S109,581,540 by the CDLAC. As noted above, to date, 
MOH has issued 923 MCCs to first-time buyers for a total 
mortgage value of $132,500,000, based on the IRS 
conversion formula discussed above. 

5. As shown in the Attachment, provided by MOH, the 
City's 2001 Mortgage Credit Certificate Program assisted 
43 low to moderate income households with a median 
household income of S52,800 and a median home 
purchase price of $288,000. from June 1, 2001 through 
March 26, 2002. 



Recommendation: Approve the proposed resolution. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



'33-27-02 l!:3Saa Froo-HAYORS OFFICE OF HOUSING 



+4152523140 




MAYOR'S OFFICE OF HOUSING 

CITY AND COUNTY OF SAN FRANCISCO 



MORTGAGE CREDIT CERTIFICATE PROGRAM 

Statistical Profile For Program Year 2001 

Between 6/1/2001 to 3/26/2002 



Attachment 



WILLIE LEWIS BROWN, ]] 
MAYC 

DARYL HIGASI 
DtRECTC 



Total number of household assisted: 



28 MCCs issued 

15 Commitments issued 



Total: 



43 



Median Household Income: 



$52,800 (61% of San Francisco SMSA median for household of 4 
persons; 11% of median for 2 persons household) 



Median Purchase Price: 
Median Mortgage Amount: 
Household Size breakdown: 



Ethnic breakdown: 



$288,000.00 
$187,000.00 

1 person 

2 persons 

3 persons 

4 or more persons 



16 
6 
S 

13 



(37%) 
(14%) 
(19%) 
(30%) 



White 

Asian/Pacific Islander 
Afric an- American 
Hispanic 



13 households 
22 

3 

5 



(30%) 
(51%) 
( 7%) 
(12%) 



Supervisor District #: 



Total: 



1 Richmond 

2 Cow Hollow, Marina, Pacific Heights 

3 Chinatown, Nob Hill, Russianjelegraph Hill, Waterfront 

4 Sunset 

5 Dubcce Park, Fillmore, Haight, Panhandle & Western Addition 

6 SOMA, Tenderloin, Treasure Island 

7 Park Merced, West of Twin Peaks 

8 Castro, Glen Park, Noe Valley 

9 Bemal Heights, Mission District 

10 Bayview, Hunters Point, Potrero, Visitation Valley 

1 1 Excelsior & OMI 



25 VAN NESS AVENUE, SUITE 6CO 



SAN FRANCISCO. CALIFORNIA 94102 . (415)252-3177 • FAX (415) 252-3140 
TDD (415) 252-3107 
70 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 8 - File 02-0333 



Department: 



Department of Administrative Services, Office of Contract 
Administration, Purchasing Division 



Item: 



Description: 



Resolution approving the expenditure of up to $20,682 in 
additional funds from the Outreach Advertising Fund for 
outreach advertising in Fiscal Year 2001-2002, for a total 
estimated Fiscal Year 2001-2002 expenditure of $120,682. 

Proposition J, which was approved by San Francisco 
voters in November of 1994, provided, in part, for an 
Outreach Advertising Fund to be established for the 
purpose of the City placing "outreach advertising" or 
weekly notices of items pertaining to governmental 
operations in periodicals selected to reflect the diversity in 
race and sexual orientation of the population of the City. 
Outreach advertisements include, but are not limited to, 
information about issues that are being reviewed by the 
Board of Supervisors and that directly affect the public. 
Pursuant to Proposition J and in accordance with Section 
2.81-2(a) of the Administrative Code, the City is required 
to withhold 10 percent of the annual amounts paid for the 
City's Type 1 and Type 2 official advertising and to 
deposit these monies into the Outreach Advertising Fund. 

Section 2.81, Official Newspaper(s) - Designation, of the 
Administrative Code defines Type 1 advertising as the 
publication of all official advertising of the City and 
County which is required by law to be published on two or 
more consecutive days, and all official advertising which 
is required to be published in accordance with the 
provisions of Sections 2.103 or 2.108 1 of the Charter foi 
special meetings of the Board of Supervisors and its 
standing or special committees. The official newspaper 
must publish at least 5 days a week for Type 1 official 
advertising. The City currently has a contract for Fiscal 
Year 2001-2002 with the San Francisco Chronicle to be 
the City's official newspaper to provide Type 1 
advertising. 



1 Section 2.81. Official N'ewspaper(s) - Designation, of the Administrative Code references Charter 
Sections 2.200 and 2.201. Those Charter Sections have been renumbered as Sections 2.103 and 
2.108, respectively. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

71 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 



Section 2.81, Official Newspaper(s) - Designation, of the 
Administrative Code defines Type 2 advertising as the 
publication of all official advertising of the City and 
County which is required by law to be published one time, 
other than the provisions of Sections 2.103 or 2.108 of the 
Charter as they relate to special meetings of the Board of 
Supervisors and its standing committees; and all official 
advertising of the City and County which is required by 
law to be published more than one time, but not more 
than three times per week for a specified number of 
weeks. The official newspaper must publish at least 3 
days a week for Type 2 official advertising. The City 
currently has a contract for Fiscal Year 2001-2002 with 
the San Francisco Independent to be the City's official 
newspaper to provide Type 2 advertising. 

On October 1, 2001, the Board of Supervisors approved a 
resolution designating El Mensajero, El Latino and El 
Reportero to be outreach newspapers for the City's 
Hispanic/Latino community; designating the China Press, 
the Chinese Times and the Asian Week to be outreach 
newspapers for the City's Chinese community; 
designating the San Francisco Bay View to be the 
outreach newspaper for the City's African American 
community; designating the San Francisco Spectrum, the 
Bay Area Reporter and the San Francisco Bay Times to be 
outreach newspapers for the City's Gay/Lesbian/ Bisexual/ 
Transgender community; designating Mo Magazine to be 
the outreach newspaper for the City's Southeast Asian 
community; designating the Russian Life to be the 
outreach newspaper for the City's Russian community; 
and designating the Hokubei Mainichi to be the outreach 
newspaper for the City's Japanese community, for Fiscal 
Year 2001-2002 (File 01-1444). In accordance with that 
previously approved resolution, the Purchasing Division 
is to obtain Board of Supervisors approval prior to 
spending more than $100,000 from the Outreach 
Advertising Fund for outreach advertising in Fiscal Year 
2001-2002. 

During the seven-month and ten day period from July 1, 
2001 through February 10, 2002, the Purchasing Division 
had incurred costs totaling $71,841.58 for outreach 
advertising, as shown in Attachment I provided by the 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

72 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Purchasing Division. As also shown in Attachment I, the 
Purchasing Division anticipates that it will incur an 
additional $48,840 for outreach advertising during the 
period of February 11, 2002 through June 30, 2002, for 
total estimated expenditures in Fiscal Year 2001-2002 of 
$120,681.58. 

Comments: 1. As shown in Attachment II, provided by the 

Purchasing Division, through February 10, 2002 the 
Purchasing Division has actually paid to the outreach 
advertising newspapers $59,140.23 from the Outreach 
Advertising Fund. If the total requested expenditure of 
$120,681.58 for Fiscal Year 2001-2002 is authorized, the 
Department would make additional payments of 
$61,541.35 ($120,681.58 less $59,140.23 already paid). 
Mr. Mike Ward of the Purchasing Division states in 
Attachment II that the Outreach Advertising Fund has a 
balance of $90,876.49 as of February 19, 2002 and that 
therefore there are sufficient funds in the Outreach 
Advertising Fund to cover the $61,541.35 to be paid by 
the City in the remainder of Fiscal Year 2001-2002. 

2. Approval of the proposed resolution by the Board of 
Supervisors would authorize the Purchasing Division to 
spend up to $20,681.58 over the $100,000 limit previously 
approved by the Board for outreach advertising, for a total 
Fiscal Year 2001-2002 expenditure of $120,681.58 from 
the Outreach Advertising Fund. 

3. According to the Purchasing Division, the total 
estimated cost for Type 1 and Type 2 official advertising 
for Fiscal Year 2001-2002 is $1,394,621. Thus, the 
Purchasing Division could spend $139,462 or 10 percent 
of the $1,394,621 for outreach advertising. As previously 
noted, the Purchasing Division estimates it will expend 
$120,681.58 or $18,780.42 less than the estimated 
maximum authorized amount (excluding carryover funds) 
of $139,462 that can be expended for outreach advertising 
in Fiscal Year 2001-2002. 

4. As of the writing of this report, the Purchasing 
Division has advised the Budget Analyst that the 
Purchasing Division intends to request that this proposed 
resolution be continued to determine if additional Fiscal 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

73 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Year 2001-2002 funds are needed to pay for outreach 
advertising costs for Fiscal Year 2000-2001. 

Recommendation: Continue the proposed resolution, as requested by the 

Purchasing Division. 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

74 



Page 1 of 2 



ATTACKXZNT A 



OUTREACH ADVERTISING 
EXPENDITURES (Ad Orders Placed) 
July 1, 2001 through February^ 2002 f\ 



Newspaper 






El Reportero 


5 14.279.18 


El Latino 


S 11,840.41 


El Mensajero 


S 5,631.64 


China Press 


$. 1,680.00 


Chinese Times 


5 4,167.12 


Asian Week 


LS 6,010.03 


S.F. Bay View 


5 6,454.80 


Bay Area Reporter 


S 2.440.40 


Hokubei Mainichi 


S 2,160.00 


S.F. Bay Times 


S 13,468.00 


Spectrum 


S 3.710.00 






Total 


S 71,341.58 



Source: California Newspaper Service Bureau 



7 5 



Attachment I 
Page 1 of 2 



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76 



City and County of San Francisco 

Willie Lewis Brown, Jr. 
Mayor 




Attacnnent ll 
Page 1 of 2 

Office of Contract Administration 

Judith A. Ulackwell 
Director 



March 5. 2002 



Purchasing Division 



TO: 



Gloria L. Young 

Clerk of the Board 

San Francisco Board of Supervisors 



FROM: 




THROUGH: Judith A. B] 
Director 
Offic 



Assistant Director of Purchasing 
Office of Contract Administration 



R£: 



Resolution Approving Additional Funds for Outreach Advertising in FY2001-2n02 



Attached please find an original and four copies of proposed resolution approving additional funds in the 
amount of S20,6S2 for the outreach advertising program in FY2001-2002. We respectfully req lest that 
the Board of Supervisors consider and approve this resolution 

Background: 



Resolution No. 745-01, adopted by the full Board on October 1, 2001, mandates that "..expend tures for 
the outreach advertising program for Fiscal Year 2001-2002 shall not exceed S 100,000 without further 
Board approval..." These funds will be exhausted the week of April 22, 2002 and additional funds are 
needed to provide for outreach advertising expenditures for the period of April 22 through June 30, 
2002. 



We would like to highlight that our letter, addressee to the Budge*. Analyst and dated September 10. 
2001, advised the Board that the outreach advertising budget for Fiscal Year 2001-2002 would be at 
least S142,4SS, for a twelve-month period. 

Revised Outreach Advertisine Budget 

Actual and projected expenditures indicate that the total outreach advertising budget irTFYZOO; -2002 
will be S120.6S1.58. as follows: -fuY^w-^ 

Actual Expenditures (ads placed by the Board) from July 1. 2001 to February/*? 2002 S 71 341 .58 

(Attachment A) 
Projected Expenditures (ads to be placed by Board from February 1 1 to June 30, 2002) S 4S S40.00 
(Attachment B) 
Total Budget in FY2001 -2002 S 120.6S1 53 

Smcs the Board released only SI 00.00 for outreach advertising S20.6S2 will be needed to pcovde 
outreach advertising through the end of Fiscal Year 2001-2002. 

City Hall. Room 430 1 Or. Carlton E. Goodlett Place San Francisco CA 94102-1635 Tgl. (41 5) SS4-6743 Fax (41 ',) 554-6717 



iwvu.Ci.s! ca 



Becvcied pock' 



77 



£ mjii P-jfci-asm. @ci t< :i.us 



Attachment II 
Page 2 of 2 



Letter to Gloria Young 
Outreach Advertising Resolution 
March 5, 2002 



Outreach Advertising Fund Balance and Amount to he Paid in Remainder of FY2 001-2002 

According to the Controller, as of February 19, 2002, the balance of the Outreach Advertising ] : und is 
S90.S76.49. Tne following shows the amount that will be paid by the City for outreach adverti ;ing in 
the remainder of FY2001-2002: ^S 

Total outreach advertising budget FY200 1-2002 ftvW SI 20,68 1.53 

Amount paid by the City, through Februaryiic_2002 59.I4Q.23 

To be paid by City in Remainder FY200 1-2002 S 61,543.25 

The above indicates that there are sufficient funds in the Outreach Advertising Fund to cover tl e amount 
to be paid by the City in the remainder of FY2001-2002. It should be noted that Section 2.81-1 of the 
Administrative Code states that this fund is for the purpose of placing weekly outreach adverti; ements. 

Timeline: 



We respectfully request that this matter be calendared for the March 20, 2002 meeting of the F nance 
Committee, or as-soon-as the scheduling permits because the funds requested will be needed bv the 
week of April 22, 2002. 

Department Contact: 

The following person maybe contacted for matters relating to this resolution: 
Michael D. Ward 554-6740. 

Assistant Director of Purchasing 

Accompanying Documents: 

The following is a list of accompanying attachments: 

A. Outreach Advertising Expenditures - July 1 , 2001 through February 4, 2002 
E. Outreach Advertising Budget - February 1 1 , 2002 through June 30, 2002 

C Resolution 



78 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

Item 9 - File 02-0172 



Departments: 



Adult Probation, Department of Consumer Assurance, 
Department of Elections, Department of Human Services, 
Department of Parking and Traffic, Department of Public 
Health, Metropolitan Transportation Authority, District 
Attorney, Emergency Communications Department, Fire 
Department, Juvenile Probation Department, Police 
Department, Public Defender, Department of Aging and 
Adult Services, Rent Stabilization and Arbitration Board, 
Sheriffs Department, Planning Department, and the 
Immigrants Right's Commission 



Item: 



Hearing to receive an update from Tier 1 City 
Departments on their implementation of the Equal Access 
to Services Ordinance. 



Description: 



The Equal Access to Services (EAS) Ordinance, approved 
by the Board of Supervisors on June 4, 2001, required 
City Departments to provide bilingual services and 
materials if a substantial or concentrated portion of the 
public utilizing their services did not speak English 
effectively because it was not their primary language (File 
No. 01-0409). As a result of the ordinance, specific City 
Departments, called "Tier 1" Departments, were required 
to translate vital documents such as forms and 
applications into, at a minimum, Spanish and Chinese 
beginning in FY 2001-2002. The ordinance also required 
Tier 1 City Departments to fill public contact positions 
with bilingual employees if a substantial or concentrated 
number of the Department's clients were limited English- 
speaking individuals. The Budget Analyst's prior May 23, 
2001 report to the Finance Committee estimated, based 
on documentation provided by the Tier 1 Departments, 
that one time costs of translating documents into Spanish 
and Chinese, to be done by a combination of outside 
consultants and in-house staff persons for the sixteen Tier 
1 Departments, would total $600,000 in FY 2001-2002 as 
a result of the EAS ordinance. City Departments could 
not provide cost estimates for printing the new translated 
documents or estimates for hiring bilingual employees. 

Under the proposed ordinance, the Immigrants Rights 
Commission (IRC) would receive and monitor the annual 
compliance plan submitted by each City Department, and 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

79 



Memo to Finance Committee 

March 20. 2002 Finance Committee Meeting 



would be responsible for enforcing compliance (see 
Comment No. 16). The EAS ordinance also required that 
the Planning Department determine annually, using U.S. 
Census data, the number of persons having limited 
English-speaking capabilities that are either 1) residing 
in a City District, or 2) receiving services from a City 
Department (see Comment No. 17). 

The sixteen Tier 1 Departments are: 1) Adult Probation, 
2) Department of Consumer Assurance, 3) Department of 
Elections, 4) Department of Human Services, 5) 
Department of Parking and Traffic, 6) Department of 
Public Health, 7) Metropolitan Transportation Authority, 
8) District Attorney, 9) Emergency Communications 
Department, 10) Fire Department, 11) Juvenile Probation 
Department, 12) Police Department, 13) Public Defender, 
14) Department of Aging and Adult Services, 15) Rent 
Stabilization and Arbitration Board, and 16) the Sheriffs 
Department. 

The Budget Analyst recently requested that all Tier 1 
Departments listed above, report costs to date directly 
and solely attributable to compliance with the EAS 
ordinance. Information was requested only for costs 
associated with 1) translating vital documents, 2) printing 
translated materials, 3) paying bilingual premiums to fill 
vacant positions with bilingual employees, and 4) 
translating new and revised written materials. The 
Budget Analyst requested that all translation costs, 
printing costs, and bilingual premium pay attributable to 
Departmental policies prior to enactment of the EAS 
ordinance be excluded from the submitted cost 
information. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

80 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



Below is a summary of FY 2001-2002 costs to date 
resulting from the EAS ordinance as reported by the Tier 
1 Departments. 



Department 


Document 
Translation 


Printing 


Bilingual Pay 


Total 


Adult Probation 


SI. 682 


S500 


- 


$2,182 


Dept. of Consumer 
Assurance 


957 


542 


- 


1,499 


Dept. of Elections 


See Comment No. 1 


- 




- 


Dept. of Human 
Services 


600 


350 


- 


950 


Dept. of Parking and 
Traffic 


See Comment No. 1 




- 


- 


Dept. of Public Health 


13.965 3 


6,042* 


3. 055* 


23.062 


Metropolitan 

Transportation 

Authority 


See Comment No. 6 






" 


District Attorney 






509 


509 


Emergency 
Communications Dept. 


545 




- 


545 


Fire Dept. 


138 


150 


- 


288 


Juvenile Probation 
Dept. 


See Comment No. 1 




- 


- 


Police Dept. 


1.050 


132 


- 


1,182 


Public Defender 


150 


1.0S5 


- 


1.235 


Dept. Of Aging and 
Adult Services 


See Comment No. 12 


- 




- 


Rent Stabilization and 
Arbitration Board 


See Comment No. 13 






- 


Sheriffs Dept. 


713 


- 


- 


713 


Total 


$19,800 


SS,801 


S3.564 


$32,165 



3 According to Mr. James Alexander of DPH, a portion of the costs reported by DPH for 
translation, printing and bilingual pay may not be solely attributable to the EAS ordinance 
since similar practices are already mandated by State and Federal regulations. Mr. 
Alexander states that DPH was unable to separate EAS ordinance related translating, 
printing and hiring activities from similar activities resulting from other policies. Therefore. 
DPH's actual EAS ordinance related costs to date may be lower than presented above. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

81 



Memo to Finance Committee 

March 20. 2002 Finance Committee Meeting 

Comments: 1. The following Departments reported that they were 

translating, printing and hiring bilingual staff persons 
prior to the EAS ordinance and estimated that there 
would be no additional costs in future years as a result of 
the ordinance. Therefore these Departments did not 
report any costs related to the ordinance in FY 2001-2002. 
or into the future. These Departments reported that they 
were already in compliance with the ordinance before it 
was adopted: 1) Department of Elections, 2) Department 
of Parking and Traffic, and 3) Juvenile Probation 
Department. 

2. According to Ms. Lee Samson of Adult Probation, Adult 
Probation has spent a total of $2,182 to date, consisting of 
SI, 682 in document translation services and $500 in 
printing services. Ms. Samson states that the translation 
services were provided by the International Effectiveness 
Center, and the printing was provided through a work- 
order with Reproduction and Mail Services. Ms. Samson 
reports that Adult Probation is currently in compliance 
with the EAS ordinance since all vital documents have 
been translated and printed. Ms. Samson states that 
because there would be no additional FY 2001-2002 
expenditures, the total cost for FY 2001-2002 is $2,182. 
Ms. Samson estimates that the annual cost for new and 
revised documents into the future would be approximately 
$500. 

3. According to Mr. Sid Baker of the Department of 
Consumer Assurance, the Department of Consumer 
Assurance has spent $1,499 to date, consisting of $957 in 
document translation services and $542 in printing 
services. Mr. Baker reports that both the translation and 
printing services were provided through a work-order 
with Reproduction and Mail Services. Mr. Baker notes 
that due to budget constraints, only one of six vital 
documents were translated and printed in FY 2001-2002. 
Mr. Baker does not anticipate any additional EAS 
ordinance related expenditures during FY 2001-2002 due 
to a lack of funds. Therefore, the total FY" 2001-2002 cost 
is $1,499. Mr. Baker estimates that an additional 
$8,000 in funds, consisting of $4,500 in translation costs 
and $3,500 in printing costs would be required to fully 
comply with the EAS ordinance. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

82 



Memo to Finance Committee 

March 20. 2002 Finance Committee Meeting 



4. Ms. Jeanne Zarka of the Department of Human 
Services (DHS), reports that DHS has spent S350 in 
printing costs and $600 in document translation costs 
directly and solely attributable to the EAS ordinance, for 
a total of $950 to date. Ms. Zarka further states that $600 
in translation services were provided by the company, 
Excel Translation Services, and $350 in printing costs 
were provided by Reproduction and Mail Services. In 
addition to the $950 spent to date, Ms. Zarka anticipates 
spending $16,000 in translation and $16,660 in printing 
during the remaining fiscal year, for a total projected FY 
2001-2002 cost of $33,610, included m the FY 2001-2002 
budget. 

In the Budget Analyst's May 23, 2001 Finance Committee 
report, the DHS estimated that translation costs for FY 
2001-2002 would total $149,870. Ms. Zarka explains that 
the current estimate of $33,610 is significantly less than 
the previous $149,870 projection because 1) DHS has 
prioritized the materials needing translation. 2) DHS has 
compiled essential information and materials into a 
comprehensive guide to all program services, and 3) the 
original projection included translation of some materials 
that were partially, though not exclusively, attributable 
to the EAS ordinance. In addition, the previous estimate 
assumed that all vital documents would be translated on 
an accelerated time schedule within one fiscal year. Ms. 
Zarka anticipates that new and revised document 
translating and printing costs in the future would be 
attributable to State and Federal regulations. Therefore, 
DPH does not estimate any future costs directly 
attributable to the EAS ordinance. 

5. According to Mr. Alexander, the Department of Public 
Health (DPH) has spent $23,062 to date, which consists of 
$13,965 in document translation services, $6,042 in 
printing services, and $3,055 in bilingual pay. As 
previously noted. Mr. Alexander states that the costs 
reported for translation, printing and bilingual pay may 
not be directly and solely attributable to the EAS 
ordinance since similar practices are already mandated 
by State and Federal regulations. Mr. Alexander further 
states that DPH was unable to separate EAS ordinance 
related activities from activities resulting from other 
similar policies. Mr. Alexander reports that document 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

83 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 

translations were provided by the International 
Effectiveness Center and DPH staff persons; 
Reproduction and Mail Services performed printing 
services. Mr. Alexander further states that the bilingual 
premiums included in this report were for vacant 
positions filled during FY 2001-2002, thus may be 
attributable to the EAS ordinance. According to Mr. 
Alexander an additional $9,975 in translation and $4,315 
in printing would be spent during the fiscal year for a 
total FY 2001-2002 cost of approximately $37,352. 

In the Budget Analyst's May 23, 2001 Finance Committee 
report, DPH estimated that costs for FY 2001-2002 would 
total $300,000. Mr. Alexander states that the $37,352 
projected FY 2001-2002 cost is significantly lower because 
the original estimate included patient and client related 
documents that were not related to the EAS ordinance. 
After subsequent review of the criteria for documents 
requiring translation under the EAS ordinance, DPH has 
determined that less than 20 percent of the documents 
included in the original estimate, or less than $60,000 of 
the original $300,000 estimate requires translation 
attributable to the EAS ordinance. Mr. Alexander advises 
that costs to translate and print remaining existing 
documents, that may be related to the ordinance, would 
not exceed $25,000. 

6. According to Mr. Joe Speaks of the Metropolitan 
Transportation Authority, Muni has not incurred any 
costs as a direct result of the EAS ordinance to date. Mr. 
Speaks states that Muni has been translating and 
printing vital documents prior to the ordinance as a result 
of other departmental policies. Mr. Speaks estimates that 
$3,000 would be spent in FY 2001-2002 consisting of 
$1,000 in translation costs and $2,000 in printing costs. 
Mr. Speaks further estimates that an additional one time 
cost of $20,000 consisting of $15,000 in translation costs 
and $5,000 in printing costs would be spent for Muni to 
fully comply with the EAS ordinance. According to Mr. 
Speaks, an annual expenditure of $3,000 would be 
required to update materials. 

7. According to Mr. Reggie Smith of the District 
Attorney's Office, the District Attorney's Office has spent 
$509 in bilingual premium costs attributable to the EAS 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

84 -■ 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



ordinance to date. Mr. Smith states that the District 
Attorney's Office has not translated or printed any vital 
documents to date due to an uncertainty of available 
funds. In addition to the $509 in bilingual pay, Mr. Smith 
estimates that during the fiscal year, there would be an 
additional expenditure of $395 in bilingual premium pay 
and $1,846 in translation, for a total projected FY 2001- 
2002 cost of $2,750 attributable to the EAS ordinance 
included in the FY 2001-2002 budget. According to Mr. 
Smith, the District Attorney's Office currently does not 
have an estimate for printing costs for the remaining 
fiscal year, or into the future. Mr. Smith estimates that 
an additional $3,605 in translation funds would be needed 
for the District Attorney's Office to comply with the 
ordinance. 

8. Ms. Anne Okubo of the Emergency Communications 
Department reports that the Emergency Communications 
Department has spent $545 on translating vital 
documents to date. Ms. Okubo states that the private 
consultant, International Effectiveness Center, provided 
translation services. Ms. Okubo further states that the 
Department will spend an additional $225 in printing 
during the fiscal year, for a total FY 2001-2002 projected 
cost of $770. Ms. Okubo reports that the Department will 
be in compliance with the ordinance once the printing is 
complete, and does not anticipate additional costs into the 
future. 

9. According to Ms. Khai Ali of the Fire Department, the 
Fire Department has spent a total of $288 to date, 
consisting of $138 in document translation and $150 in 
printing. Ms. Ah reports that Fire Department staff and 
translation software were used to translate materials, 
and printing services were provided by Reproduction and 
Mail Services. According to Ms. Ali, the Fire Department 
has not fully translated all of its documents due to a lack 
of sufficient funds. Ms. Ali estimates that an additional 
$11,000, absorbed into the FY 2001-2002 budget, would 
be spent during the fiscal year for translation services, for 
a total projected FY 2001-2002 cost of $11,288. Ms. Ali 
states that the cost to translate and print all vital 
documents, in compliance with the EAS ordinance, would 
be approximately $28,000. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

85 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



10. According to Ms. Karen Hickman of the Police 
Department, the Police Department has spent $1,182 to 
date, consisting of $1,050 in document translation 
services, and $132 in printing services. Ms. Hickman 
reports that translation services were provided by Project 
Safe and Police Department staff; Printing services were 
provided by Reproduction and Mail Services. According to 
Ms. Hickman, the Police Department has not fully 
translated all of its documents due to a lack of sufficient 
funds. Lt. Gary Manini of the Police Department 
estimates that an additional $15,000 in translation and 
printing, absorbed in the FY 2001-2002 budget, would be 
spent during the fiscal year, for a total projected FY 2001- 
2002 cost of $16,182. According to Lt. Manini, the Police 
Department has not yet received a cost estimate for 
translating its remaining documents, and therefore 
cannot separate the estimated $15,000 in additional 
expenditures into translation and printing costs. 
According to Lt. Manini, the Police Department is also 
unable to estimate the total cost to comply with the EAS 
ordinance, but anticipates spending an additional $60,000 
in FY 2002-2003. 

11. According to Mr. Randall Martin of the Public 
Defender's Office, the Public Defender's Office has spent 
$1,235 to date, consisting of $150 in document 
translation and $1,085 in printing. According to Mr. 
Martin, documents were translated by Department staff, 
then reviewed by court-certified interpreters; 
Reproduction and Mail Services provided printing 
services. Mr. Martin reports that an additional $900 in 
translation and $3,255 in printing would be spent in the 
fiscal year, for a total projected FY 2001-2002 cost of 
$5,390, at which time the Public Defender's Office would 
be in compliance with the EAS ordinance. Mr. Martin 
explains that the low number of documents translated to 
date is a result of translation delays within the 
Department. According to Mr. Martin, the Public 
Defender's Office anticipates spending approximately 
$750 annually on new and revised documents in the 
future to comply with the EAS ordinance. 

12. According to Mr. John Clark of the Department of 
Aging and Adult Services, the Department of Aging and 
Adult Services has not spent any funds to date 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

86 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



attributable to the EAS ordinance. Mr. Clark estimates 
that approximately $2,250 would be spent in FY 2001- 
2002 consisting of $1,000 in translation costs and $1,250 
in printing costs. Mr. Clark further estimates that an 
additional $500 in translation and $1,000 in printing, or 
$1,500 would be required for the Department to fully 
comply with the EAS ordinance. Mr. Clark does not 
anticipate further costs for translating existing 
documents into the future. 

13. According to Mr. Joe Grubb of the Rent Stabilization 
and Arbitration Board, the Rent Stabilization and 
Arbitration Board has not spent any funds to date 
attributable to the EAS ordinance. Mr. Grubb notes that 
the Rent Stabilization and Arbitration Board has already 
previously translated into Spanish and Chinese, 68 
written materials called scripts, which describe 
departmental functions and services. Mr. Grubb 
estimates that approximately $30,000, included in the FY 
2001-2002 budget, would be spent during the remainder 
of FY 2001-2002 to translate and record scripts in 
Spanish and Chinese. Mr. Grubb states that the Rent 
Stabilization Board anticipates spending an additional 
$72,857 consisting of $67,000 in translation costs and 
$5,857 in printing costs to comply with the EAS 
ordinance. 

14. According to Ms. Jean Mariani of the Sheriffs 
Department, the Sheriffs Department has spent $713 to 
date on document translation services provided by a 
private consultant, Language Line Services. Ms. Mariani 
states that the Sheriffs Department had already 
translated most of its documents prior to the EAS 
ordinance, and is currently in compliance with the 
ordinance. Ms. Mariani further states that the Sheriffs 
Department does not anticipate any additional 
expenditures in FY 2001-2002. According to Ms. Mariani, 
the Sheriffs Department does anticipate future 
expenditures for new and revised documents, but cannot 
estimate the annual cost at this time. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

87 



Memo to Finance Committee 

March 20, 2002 Finance Committee Meeting 



15. As reported by the 16 Tier 1 Departments, the total 
estimated FY 2001-2002 costs associated with the EAS 
ordinance is $146,986. Below is a summary of total 
projected translating, printing and bilingual premium 
expenditures in FY 2001-2002 as reported by each 
department, including costs to date and projected costs for 
the balance of FY 2001-2002. 



Department 


Bilingual Pay 


Document 
Translation 


Printing 


Total 
FY 2001-2002 


Adult Probation 




$1,682 


$500 


$2,182 


Dept. of Consumer 
Assurance 




957 


542 


1,499 


Dept. of Elections 




- 


- 


. 


Dept. of Human 
Services 




16,600 


17,010 


33,610 


Dept. of Parking and 
Traffic 




- 


- 


- 


Dept. of Public Health 


3,055 


23,940 


10,357 


37,352 


Metropolitan 

Transportation 

Authority 




1,000 


2,000 


3,000 


District Attorney 


904 


1,846 


- 


2,750 


Emergency 
Communications Dept. 




545 


225 


770 


Fire 
Department 




11,138 


150 


11,288 


Juvenile Probation 
Dept. 




- 


- 


- 


Police Dept. 




1,050 


132 


1,182 


Public Defender 




1,050 


4,340 


5,390 


Dept. Of Aging and 
Adult Services 




1,000 


1,250 


2,250 


Rent Stabilization and 
Arbitration Board 




30,000 




30,000 


Sheriffs Dept. 




713 




713 


Total 


$3,959 


$91,521 


$36,506 


$131,986 


Police Dept. 








15,000 b 


Total 
FY 2001-2002 








$146,986 



16. According to Mr. Dang Pham of the Immigrant 
Rights Commission (IRC), the IRC has to date, developed 
a compliance checklist, as shown in the Attachment 
provided by Mr. Pham, to assist Tier 1 Departments in 
formulating compliance plans. In addition, Mr. Pham 



b According to Lt. Manini, the Police Department could not allocate the $15,000 projected FY 
2001-2002 costs into translation costs and printing costs. Therefore, the $15,000 was not 
included in the total printing and translation totals. 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

88 



Memo to Finance Committee 

April 3, 2002 Finance Committee Meeting 

states that the IRC has implemented a three-step process 
which provides the Departments with written reminders 
of their obligations under the EAS ordinance, and sets 
forth deadlines for compliance. Mr. Pham advises that the 
IRC is currently reviewing the Tier 1 Department 
compliance plans to determine whether they comply with 
the EAS ordinance. 

17. According to Ms. Christine Haw of the Planning 
Department, the Planning Department has to date 
gathered and reviewed the 1990 U.S. Census data. 
However, because the 1990 U.S. Census data is not a 
timely document according to Ms. Haw, the Planning 
Department is currently awaiting the release of a detailed 
form of the 2000 U.S. Census data, which will be used to 
determine the number of persons having limited English 
speaking capabilities. Ms. Haw further states that the 
Planning Department, in consultation with the IRC, has 
determined that emphasis would be placed on Spanish 
and Chinese speakers per supervisoral district. 



^//^t 




Harvey M. Rose 



cc: Supervisor Peskin 
Supervisor Daly 
President Ammiano 
Clerk of the Board 
Controller 
Ben Rosenfield 
Ted Lakey 



BOARD OF SUPERVISORS 

BUDGET ANALYST 

89 



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City and County of San Francisco aty Han 

J J 1 Dr. Carlton B. 

Meeting Minutes coodienpiace 

San Francisco, CA 

Finance Committee 94102-4689 

Members: Supervisors Aaron Peskin and Chris Daly 

Clerk: GailJohnson 

Wednesday, April 10,2002 12:30 PM City Hall, Room 263 

Regular Meeting 

Members Present: Aaron Peskin, Chris Daly, Tom Ammiano. 



President Ammiano appointed himself to serve as a member of the Finance Committee. 
MEETING CONVENED 

The meeting convened at 12:37 p.m. 

020144 [Establishing Trial Rates for City Owned Garages and Metered Parking Lots] 

Resolution approving trial rates as proposed permanent parking rates, with adjustments, for the Civic Center 

Garage, the Ellis O'Farrell Garage, the 16th & Hoff Street Garage, the 324-8th Avenue Parking Lot (at 8th and 

Clement), the 330-9th Avenue Parking Lot (at 9th and Clement) and the 42 1-1 8th Avenue Parking Lot (at 18th 

and Geary) and the Performing Arts Garage. (Parking and Traffic Department) 

2/6/02, RECEIVED AND ASSIGNED to Finance Committee. 

2/27/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Steven Lee, Parking Authority; Ronald Szeto, 

Parking Authority. 

Continued to 3/20/02. 

3/27/02, CONTINUED. Speakers; None. 

Continued to 4/10/02, 

Heard in Committee. Speakers: Stephen Wally. Jewelry by Stephen: Ronald Szeto. Acting Director. Parking 
Authority; Theodore Lakey, Deputy City Attorney; Billie Bragman. Board of Ellis O'Farrell Garage; Paul 
Serigan. 

Continued to 4/24/02. 
CONTINUED by the following vote: 
Ayes: 3 - Peskin, Daly, Ammiano 



City and County of San Francisco I Printed at $: IS PM on 3/3/04 



Finance Committee Meeting Minutes April 10, 2002 



020390 [Administrative Code Revision: Health Service System] 
Supervisor McGoldrick 

Ordinance amending Chapter 16, Article XV, of Part 1 of the San Francisco Municipal (Administrative) Code 
by amending Section 16.703 regarding Board approval of Health Service System Plans and Contribution Rates. 
(Human Resources Department) 

(Fiscal impact.) 

3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. 

3/27/02, CONTINUED. Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Yvonne Hudson, Health Service System; Mike 

Kramer, Towers Perrin. 

Continued to 4/10/02. 

Speakers: None. 
Continued to 4/1 7/02. 
CONTINUED by the following vote: 

Ayes: 3 - Peskin, Daly, Ammiano 



020192 [Supplemental Appropriation, Department of Human Services] 
Supervisor Gonzalez 

Ordinance appropriating $47,000 of the General Reserve to fund Homeless Prenatal Services for the 

Department of Human Services for fiscal year 2001-02. 

2/4/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Rob Eshelman, Legislative Assistant to Supervisor Gonzalez; Harvey Rose, 

Budget Analyst; Cindy Ward, Department of Human Services. Homeless Programs; Martha Ryan, Executive 

Director, Homeless Prenatal Program; Rosan Fernandez; Woody Harden; Lisa Smith, Counselor, Homeless 

Prenatal; Virginia Martinez, Program Director, Homeless Prenatal; Liz Strand, employee. Homeless 

Prenatal; Peg Stevenson, Controller's Office. 

Amended by placing $23,500 on reserve. 

AMENDED. 

Ordinance appropriating $47,000 of the General Reserve to fund Homeless Prenatal Services for the 

Department of Human Services for fiscal year 2001-02; placing $23,500 on reserve. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 2 - Peskin, Daly 

Absent: 1 - Ammiano 



City and County of San Francisco 2 Printed at 5:18 PM on 3/3/04 



Finance Committee 



Meeting Minutes 



April 10, 2002 



020410 [Municipal Transportation Agency Leverage Lease Financing] 
Mayor 

Resolution authorizing one or more defeased lease-to-service contract transactions with respect to up to 118 
Breda light rail cars; approving the form of and authorizing the execution and delivery of one or more 
Participation Agreements setting forth the terms and conditions of the lease-to-service contract transactions 
relating to the rail cars; approving the form of and authorizing the execution and delivery of one or more Head 
Lease Agreements providing the terms and conditions pursuant to which the rail cars will be leased to one of 
up to 6 trusts; approving the form of and authorizing the execution and delivery of one or more Head Lease 
Supplements supplementing the terms and conditions pursuant to which specific rail cars will be leased to each 
trust; approving the form of and authorizing the execution and delivery of one or more Sublease Agreements 
providing the terms and conditions pursuant to which each trust will lease the rail cars back to the City to be 
operated and maintained by the City; approving the form of and authorizing the execution and delivery of one 
or more Sublease Supplements supplementing the terms and conditions pursuant to which the City will lease 
back the rail cars from each trust; approving the form of and authorizing the execution and delivery of one or 
more Payment Agreements providing the terms and conditions pursuant to which the City will provide for the 
payment of a portion of the sublease rent; approving the form of and authorizing the execution and delivery of 
an Equity Collateral Security Agreement and a Custody Agreement providing the terms and conditions 
pursuant to which the City will provide for a custody account to hold and a security interest in, certain 
securities for the payment of a portion of the sublease rent and the purchase option purchase price if the 
purchase option is or is deemed exercised; approving the form of and authorizing the execution and delivery of 
one or more Support and Access Agreements providing the terms and conditions pursuant to which the City 
will provide each trust support and access to certain property if the City chooses not to purchase the rail cars at 
the end of the "base" sublease term; approving the form of and authorizing the execution and delivery of one or 
more Agreements for Assignment on Default each of which will provide the lender with an option to purchase, 
and take an assignment from an equity investor, such equity investor's beneficial interest in the trust estate upon 
the occurrence of a trigger event (as such term is defined in said Agreement); approving the form of and 
authorizing the execution and delivery of one or more Tax Indemnification Agreements providing the terms 
and conditions pursuant to which the City will indemnify each equity investor for income inclusions or losses 
of tax benefits; approving the form of and authorizing the execution and delivery of one or more Insurance and 
Indemnity Agreements providing the terms and conditions pursuant to which the City will indemnify each strip 
surety provider; approving indemnification of various parties; acknowledging the waiver of the City's right to 
jury trial under certain circumstances; acknowledging proposed waiver requests pursuant to Sections 12B.5- 
1(d) and 12C.5-l(d) of the San Francisco Administrative Code; finding that the lease-to-service contract 
transaction is designed to reduce the amount or duration of payment or similar risk to the City or enhance the 
relationship between risk and return with respect to investments made pursuant to or in connection with such 
transaction; approving and authorizing the execution and delivery of any document necessary to implement this 
Resolution; authorizing the execution and delivery of documents in conforming sets for one or more equity 
investors; ratifying and approving any action heretofore taken in connection with the transaction contemplated 
by this Resolution; and related matters. (Mayor) 
3/1 1/02, RECEIVED AND ASSIGNED to Finance Committee. 
3/27/02, CONTINUED. Speakers: None. 
Continued to 4/10/02, 



City and County of San Francisco 



Printed at 5:18 PM on 13/04 



Finance Committee Meeting Minutes April 10,2002 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Michael Burns, General Manager, Municipal 

Railway; Theodore Lakey, Deputy City Attorney; Peter Ross, Financial Advisor for the City; Monique Moyer, 

Mayor's Office of Public Finance; Edward Harrington, Controller; Andrew Sullivan; Jim Chappel, President, 

SPUR; Kevin Hughes, Assistant Business Manager, Electrical Workers, Local 6. 

Amended on page 14, line 13, at the end of the paragraph, by adding the following: "Any changes, additions 

or modifications by the Mayor or his designee should not substantially alter the agreements as approved by 

the Board of Supervisors If amy such changes, additions or modifications are substantive, additional Board of 

Supervisors approval is required. " 

Further amended on page 14, line 25, at the end of the paragraph, by adding the following: "Any such 

agreements or actions should result in a transaction that is substantially the same as that approved by the 

Board of Supervisors. If such agreements or actions result in a transaction that differs substantially from that 

approved by the Board of Supervisors, additional Board of Supervisors approval is required. " 

AMENDED. 

REFERRED WITHOUT RECOMMENDATION by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



020463 [Extending Budget Analyst agreement for two years (through 2005)] 
Supervisor Ammiano 

Motion approving an Agreement for Professional Budget Analyst Services between the City and County of San 
Francisco and Stanton W. Jones and Associates; Debra A. Newman; Rodriguez, Perez, Delgado & Company 
Certified Public Accountants; Harvey M. Rose Accountancy Corporation Certified Public Accountants; and 
Louie & Wong LLP Certified Public Accountants ("A Joint Venture") for two years (January 1, 2004 through 
December 31, 2005) with three additional two-year options for extension being given to the City (for a total 
possible term of eight years, through December 31, 201 1), at an annual cost of $2,090,339, as may be adjusted 
annually. 

(Fiscal impact.) 

3/18/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Gloria Young, Clerk of the Board; Harvey Rose, Budget Analyst. 

Amendment of the Whole bearing new title prepared in Committee. 

AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE. 

Motion amending the Agreement for Professional Budget Analyst Services between the City and County of San 
Francisco and Stanton W. Jones and Associates; Debra A. Newman; Rodriguez, Perez, Delgado & Company 
Certified Public Accountants; Harvey M. Rose Accountancy Corporation Certified Public Axcountants; and 
Louie & Wong LLP Certified Public Accountants ("A Joint Venture") by extending the Agreement for an 
additional two years (January 1, 2004 through December 31, 2005) with two additional two-year extensions 
being given to the City (for a total possible term extension of six years, through December 31, 2009), at an 
annual cost of $2,090,339, as may be adjusted annually. 

(Fiscal impact.) 

4/10/02 - Amendment of the Whole bearing new title prepared in Committee. 

RECOMMENDED AS AMENDED by the following vote: 

Ayes: 2 - Peskin, Daly 

Absent: 1 - Ammiano 



City and County of San Francisco 4 Printed at 5:18 PM on 3/3/04 



Finance Committee 



Meeting Minutes 



April 10, 2002 



020445 [Sale of Real Property] 
Supervisor Maxwell 

Resolution authorizing and approving the transfer of the real property located in the City of San Francisco by 
and between the City and County of San Francisco, for the Department of Public Health, as Seller, and 
Visitacion Valley Community Center, Inc., as Buyer; authorizing and approving the conveyance of the real 
property located at Assessor's Block 6237, Lots 009 through 013, commonly known as 50 Raymond Avenue; 
adopting findings that such conveyance is consistent with the City's General Plan and the Eight Priority Policies 
of City Planning Code Section 101.1; and adopting findings that such conveyance is categorically exempt from 
compliance with the California Environmental Quality Act. 
3/1 8/02, RECEIVED AND ASSIGNED to Finance Committee. 
Speakers: None. 
CONTINUED TO CALL OF THE CHAIR by the following vote: 

Ayes: 2 - Peskin, Daly 

Absent: 1 - Ammiano 



020137 [Funding the Sheriffs Department's shortfalls in salary, overtime, and retirement payoffs] 

Ordinance appropriating $1,896,196 from the General Fund Reserve, $2,793,734 from Federal funding for 
housing prisoners, and reappropriating $300,000 from savings in natural gas for a total of $4,989,930 to cover 
shortfalls in salaries, overtime and retirement payoffs at the Sheriffs Department for fiscal year 2001-02. 
(Sheriff) 

(Fiscal impact.) 

2/4/02, RECEIVED AND ASSIGNED to Finance Committee. 

Heard in Committee. Speakers: Harvey Rose, Budget Analyst; Jean Mariani. Sheriff's Department: Michael 
Hennessey, Sheriff; Taylor Emerson, Mayor's Budget Office. 
RECOMMENDED by the following vote: 

Ayes: 2 - Peskin, Daly 
Absent: 1 - Ammiano 



City and County of San Francisco 



Printed at 5: IS PU on 3 3 "J 



Finance Committee Meeting Minutes April 10, 2002 



The Chair will entertain a motion to continue consideration of the following item (File 020193) 
to a future meeting: 



020193 [Emergency Response Fee Amendments] 
Supervisors Peskin, Daly 

Ordinance amending Articles 6 and 10a of the San Francisco Business And Tax Regulations Code by amending 
Sections 6.1-1, 750, 751, 753, 755 and 757, deleting section 756 and adding sections 752.2 And 755.1 to 
clarify the application of the Code's common administrative provisions to the Emergency Response Fee; to 
provide for use of Emergency Response Fee Revenues for operating costs of the 9 1 1 Communication System; 
to update the findings supporting the fee; to increase the amount of the annual cap on fee payments per account, 
per service location to reflect inflation; to increase the fee rate for trunk line subscribers and add a rate for high 
capacity trunk line subscribers; and to eliminate the fee sunset, and amending section 10.100-67 of the San 
Francisco Administrative Code to allow for use of monies in the Emergency Communications 911 Emergency 
Response Fund for operating costs of the 9 1 1 Communication System. 

(Fiscal impact.) 

2/4/02, ASSIGNED UNDER 30 DAY RULE to Finance Committee, expires on 3/6/2002. 

4/8/02, SUBSTITUTED. Supervisor Peskin submitted a substitute ordinance bearing new title, approved as to form. 

4/8/02, ASSIGNED to Finance Committee. 

Speakers: None. 

Continued to 4/24/02. 

CONTINUED by the following vote: 

Ayes: 2 - Peskin, Daly 

Absent: 1 - Ammiano 



ADJOURNMENT 



The meeting adjourned at 4:27 p.m. 



Cit\ and County of San Francisco 6 Printed at 5:18 PM on 3/3/04 



0.25 

I 

lohx 



CITY AND COUNTY 




[Budget Analyst Report] 

Susan Horn 

Main Library-Govt. Doc. Section 



OF SAN FRANCISCO 



SAN 



f 



OARD OF SUPERVISORS 



BUDGET ANALYST 



1390 Market Street, Suite 1025, San Francisco, CA 94102 (415) 554-7642 
FAX (415) 252-0461 



TO: > Finance Committee 

FROM: ^Budget Analyst 

SUBJECT: April 10, 2002 Finance Committee Meeting 

Item 1 - File 02-0144 



April 4, 2002 

DOCUMENTS DEPT, 

APR - 8 2092 

SAN FRANCISCO 
PUBLIC LIBRARY 



Note: This item was continued by the Finance Committee at its meeting of March 
27, 2002. 



Department: 



Item: 



Description: 



Department of Parking and Traffic (DPT) 
Parking Authority 

Resolution approving parking rates at the following seven 
City-owned parking facilities: the Civic Center Garage, 
the Ellis O'Farrell Garage, the 16 th and Hoff Street 
Garage, the Performing Arts Garage, the 324 8 th Avenue 
Parking Lot (at 8 th and Clement), the 330 9 th Avenue 
Parking Lot (at 9 th and Clement), and the 421 18 th 
Avenue Parking Lot (at 18 th and Geary). 

In accordance with Section 17.14 of the Administrative 
Code, the Parking and Traffic Commission can establish 
parking rates at City-owned parking facilities on a trial 
basis for a period of up to 360 days, without first 
obtaining approval of the Board of Supervisors. The 
Parking and Traffic Commission has oversight 
responsibility of 40 City-owned parking facilities, of which 
19 are parking garages and 21 are metered parking 
facilities. This responsibility includes recommending 
permanent parking rates to be charged at these parking 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



facilities, which are subject to approval, by the Board of 
Supervisors. 

The proposed resolution would adopt permanent parking 
rates recommended by the Parking and Traffic 
Commission at the seven City-owned parking facilities 
identified above, generally at the same rates which had 
been implemented by the DPT on a trial basis. A 
comparison of the proposed subject recommended 
permanent parking rates to both the original parking 
rates previously approved by the Board of Supervisors 
and to the trial parking rates established by the Parking 
and Traffic Commission, is shown in Attachment I, 
provided by Mr. Steven Lee of the Parking Authority. 
Attachment II, provided by Mr. Lee, explains the 
adjustments between the previously established trial 
parking rates and the proposed subject permanent 
parking rates at the seven City-owned parking facilities. 

According to Mr. Lee, the existing parking rates for the 
seven subject City-owned parking facilities were 
implemented by the DPT on a trial basis as follows: 



Garage 


Trial Period 
Start Date 


360-day Expiration 
Date 


Civic Center Garage 


September 1, 2001 


August 26, 2002 


Ellis O'Farrell Garage 


March 1, 2001 


February 26, 2002 


16 th and Hoff Street Garage 


March 1, 2001; 
December 1, 2001 


February 26, 2002; 
November 26, 2002* 


Performing Arts Garage 


October 1, 2001 


September 25, 2002 


324 8 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 


330 9 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 


421 18 th Avenue Parking Lot 


August 14, 2001 


August 9, 2002 



*According to Mr. Lee, trial valet parking rates were implemented on March 1, 2001 and 
increased long-term valet parking rates were implemented on December 1, 2001 for the 
16 Ih and Hoff Street Garage. 

According to Mr. Lee, the DPT implemented the parking 
rates on a trial basis to meet the Department's objectives 
to reduce traffic, promote short-term transient parking, 
discourage low-occupancy commuter parking and increase 
revenues in City-owned parking facilities. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

2 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

As shown in Attachment III, provided by Mr. Lee, the 
subject seven City-owned parking facilities currently have 
a total parking space capacity of approximately 2,600 
parking spaces. According to Mr. Lee, the 2,600 parking 
spaces accommodate both approximately 968 monthly 
parking patrons and approximately 101,500 transient 
parking patrons per month. 

Comments: 1. Attachment III, also contains projected parking 

revenues for FY 2001-2002 and for FY 2002-2003 for the 
subject seven City-owned parking facilities. As shown in 
Attachment III, Mr. Lee estimates that the proposed 
permanent parking rates for all seven City-owned parking 
facilities will generate estimated total gross parking 
receipts of $8,643,600 in FY 2001-2002 or $76,038 more 
than the actual parking receipts of $8,567,562 collected in 
FY 2000-2001. Also shown in Attachment III, Mr. Lee 
estimates that the proposed permanent parking rates for 
all seven parking facilities will generate estimated total 
parking receipts of $8,881,000 in FY 2002-2003 or 
$313,438 more than the actual parking receipts of 
$8,567,562 collected in FY 2000-2001. According to Mr. 
Lee, the projected total parking receipts for the Civic 
Center Garage for FY 2001-2002 and the projected total 
parking receipts for the Ellis O'Farrell Garage were both 
affected by the events of September 11, 2001. 

2. In Attachment II Mr. Lee explains the valet transient 
parking rates at the 16 th and Hoff Street Garage. 

3. Mr. Lee advises that trial monthly carpool rates at the 
Ellis O'Farrell Garage and the 16 th and Hoff Street 
Garage, as shown in Attachment I, were designed to 
encourage carpooling and to open up more parking spaces 
for increased short term parking. To qualify for the 
carpool rate there must be three or more occupants in the 
vehicle. According to Mr. Lee, the "Re-opening Garage 
Fee" rates listed in Attachment I do not accrue to the City 
but rather accrue to the garage operators. 

4. At its meeting of February 27, 2002, the Finance 
Committee requested DPT to update the Committee on 
the status of the eviction of some commercial sub-tenants 
occupying space on the ground floor of the Ellis O'Fari-ell 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

3 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

Garage at 121 O'Farrell. Attachment IV, provided by Mr. 
Ron Szeto of DPT, is a memorandum in response to the 
Committee's request with respect to such evictions. 

5. At its meeting of March 27, 2002, the Finance 
Committee requested DPT to update the Committee on 
the status of the eviction of some commercial sub-tenants 
occupying space on the ground floor of the Ellis O'Farrell 
Garage at 121 O'Farrell. Mr. Szeto advises that the 
status of the eviction has not changed since the March 20, 
2002 Finance Committee Meeting. 

Recommendation: Approval of the proposed resolution is a policy decision for 

the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 

4 



At nachm en c 
^sge I or 5~ 




0.0 
1.0 

2.0 
3.0 
4.0 
5.0 
6.0 



.0 

- 3.0 

- 4.0 

- 5.0 

- 6.0 Hours 
" 7.0 Hours 

Lost Ticket 

Special Event 

Motorcycle 

Student 

Bicycle 

Berkeley Repertory Theatre/Ban 

Overnight Flat Rate 

Overnight FIai Rate Kour _ 



; vet 
0.0 
1.0 
2.0 

3.0 



'^-dlOJ lpm until Cl osing} 
1.0 Hour 
2.0 Hours 
3.0 Hours 
- Hours 




Original 

Parking 

Rates 

1.50 
3.00 
4.50 
6.00 
3.00 
10.00 
12.00 
13.00 
8.00 
1.00 
5.00 
Free 
N/A 
N7A 



Trial 

Parkin2 

Rates 

1.50 
3.00 
4.50 

6.00 

8.00 

10.00 

12.00 

IS. 00 

9.50 

1.00 

5.00 

Free 

4.00 

2.00 



(9:00 PM to 9:00 AM Mon through 
(9:00 PM to 12:00 PM Sat and Sun) 



Proposed 
Permanent 

Parking 
Rates 

1.50 

3.00 

4.50 

6.00 

S.00 
10.00 
12.00 
18.00 

9.50 

1.00 
5.00 
Free 
4.00 
2.00 
Fri) 



Marking ber-veen 9:00 AM 



.e-oper.inc c 



1.50 
3.00 
4.50 
6.00 

156.25 
90.00 
25.00 

125.00 
75.00 
75.00 

N/A 
o 6:00 PM M 

25.00 
25.00 
25.00 

50 00 
50.00 



1.50 
3.00 
4.50 
6.00 

156.25 
90.00 
25.00 
125.00 
75.00 
75.00 
75.00 
or.cay through F 

25.CC 

25.00 
25 0': 
50.0C 
50.00 



1.50 
3.00 
4.50 
6.00 



156.25 
90.00 
25.00 

125.00 
75.00 
75.00 
75.00 



25.00 

; 5 oc 
2 5 00 

50 00 
50 00 



Exhibit A 



Attachment I 
Page 2 of 5 



JR ELI.OARAGF 






0.0 
1.0 
2.0 
3.0 
4.0 
5.0 
6.0 



.0 
2.0 
3.0 
4.0 
5.0 
6.0 
7.0 



Hour 
Hours 
Hours 
Hours 
Hours 
Hours 
Hours 
Over 7 Hours 

Maximum Mon.-Sat. Day Race 
Motorcycle Fiat Fee 

Sun&ixJlav-BjUi z cSdH am ta 6 -™ 

0.0 

1.0 
2.0 
3.0 
4.0 



00 nm ! 



1.0 

2.0 
3.0 
4.0 
5.0 



Hour 
Hours 
Hours 
Hours 
Hours 



pml 



Original 
Parking 

Races 

1.00 

3.00 

5.00 

7.00 

9.00 

12. 0C 

15.00 

15.00 

15.00 

3.00 

1.00 
3.00 
5.00 



Maximum Sunday Day Rate 



: yp r 
0.0 

1.0 
2.0 
3.0 
4.0 



1.0 
2.0 
3.0 
4.0 
5.0 



?ht 6:00 p m until closing) 



:our 
Hours 
Hours 
Hours 
Hours 
Maximum Evening Rate 

Monday through Saturday 
Sunday 

Regular 
Carpool 

Lace Monthly Payments 
Los; Access Care 
Damaged Access Card 
Access Card Deposic 
Re-opening Garage Fee 



Exhibit B 



5.00 

1.00 
3.00 
5.00 

5.00 

20.00 
10.00 

195.00 
iN'/A 

N'/A 

25.00 
N/A 

25.00 
•N7A 





Proposed 


Trial 


Permanent 


Parking 


Parkin^ 


Rates 


Rates 


2.00 


2.00 


3.00 


3.00 


4.00 


-4.00 


6.00 


6.00 


9.00 


9.00 


12.00 


12.00 


15.00 


15.00 


20.00 


20.00 


20.00 


20.00 


3.00 


3.00 


1.00 


2.00 


2.00 


3.00 


3.00 


4.00 


4.00 


6.00 


5.00 




5.00 


6.00 


1.00 


1.00 


2.00 


2.00 


3.00 


3.00 


4.00 


4.00 


5.00 


5.00 


5.00 


5.00 


25.00 


25.00 


10.00 


11.00 


250.00 


250.00 


125.00 


125.00 


25.00 


25.00 


25 0* 


25.00 


25.00 


25.00 


50.00 


50.00 


50.00 


^n nn 



iI"02TO] 14=50 CITY k CO OF S. F. PARKING DE?T TEUiS i54 Q 834 



Ifim-md Hnrrz^. ni1n: . 



7.0 Koun 6-00 

2-V Hours 8.00 

12.00 



D- l-_ 



Regular 

Orpcol 750 ° 75.Q0 



Lok Acessa Card 

Darrugod Accc 3 . Czri 

Ae «ssC*rdDe ?0I i. 
Re-cpeswg f: ; 



Exhibit C 



N/A «... '~ uu 100.00 



75.00 



50.00 



Attachment I 
Page 3 of 5 



Original Trja] Proposed 

P^riane »„, , lal Permanent 

""^•rtJOata* 015 ^ Hate, RafM 

7>««,«„ VehidesSd/iPnri (2 hour linn) 
(Enforced 9:00 am to 6.00pm) 

n°< Rare (ap^U. ^ bOOpm) 

Flit Rate (MOpm Mc n dtalns) f Q 

Transient Vehicles - Vol* Pu kin V 0nJy °° 

Mil Day Rata 

Transient ViHicle, . Va let ?arKn S Q . 
00 - I.0 Hour 

LQ " 2-0 Hours 2.C0 

20 " 3.0 Hours 2.00 

30 - -«.0 Koun 2.00 

40 - S.O Hours "3-00 

50 • 6-0 Hours 4.50 



l.OO 



D " y Ral " <°pe-™ S untl, 6:00 pm) 
Transient Vehicles. Vutefariing Only 

00 - 1-0 Hour 

10 - 2.0 Eours 

° * 5 -° Ho «* 4.00 

Evening Rites (6:00 pm mlB dasi 6.00 

Transient Vehicles- V alti?ar]6 „ e 0nly 

- 1.0 Hem 

1.0 - ? n a 

•'- houn - „„ 

2.0 . 30 .. 2-00 

J - u .-.ours 

24Kourir.ax-mu.- °° 

6.00 

Lost Ticket 12.00 



12.00 



50.00 



25.00 
25.00 
25.00 
50.00 

50.00 



EER EQRMPsT, ART^r.^ AHf 



Attachment j 
fage (i of 5' 



°0 - 1.0 Hour 

1-0 " 2.0 Hours 

2 -0 - 3.0 Hours 

3-0 - 4.0 Hours 

4.0 - 5.0 Hours' 

50 - 6.0 Hours 

6 -0 - 7.0 Hours 

24 Hour Maximum 

Los: Ticke: 

Early Bird 

Motorcycle 

Special Event 

Overnight Flat Rate 

Overnight Flat Rate Hours 

Must enter before closing and 

remain overnisht. 

Mmilhiy_p^ lkillg 

Regular 

City Departments 

Carpool 

&isc£llang gusCharops 
Late Monthly Payments 
Lost Access Card 
Damaged Access Card 
Access Card Deposit 
Re-opening Garase Fee 



Original 

Parking 

Rates 

1.50 

3.00 

4.50 

6.00 

8.00 

10.00 

12.00 

15.00 

15.00 

7.00 

2.00 

8.00 

3.00 

(From closing 

until 9:00 am) 



140.00 

75.00 
75.00 



25.00 
25.00 
25.00 
50.00 
50.00 



Trial 

Parking 

Rates 

1.50 

3.00 

4.50 

6.00 

8.00 

10.00 

12.00 

14.00 

15.00 

7.00 

2.00 

9.50 

2.00 



Proposed 

Permanent 

Parkin^ 

Rates 

1.50 

3.00 

4.50 

6.00 

8.00 

10.00 

12.00 

14.00 

14.00 

7.00 

2.00 

9.50 

2.00 



(From 9:00 PM until 12 noon next 
day the garage is open for business) 



40.00 
75.00 
75.00 



25.00 
25.00 
25.00 
50.00 
50.00 



.40.00 
75.00 
75.00 



25.00 
25.00 
25.00 
50.00 
50.00 



Exhibit D 



til 



Attachment I 
Pase 5 of 5 




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Attachment 
Page I or ■ 
City and County of San Francis 



DEPARTMENT OF PARKING t-=,.~ 



WILLIE LEWIS BROWN. JR. MavQ r 
FRED M. HAMDUN. EXEcStISSeCTOR 

RONALD SZETO. ACTING DIRECTOR. PARKJNG 




AUTHORITY 



MEMORANDUM 



DATE: 
TO: 

FROM: 
SUBJECT: 



February 20, 2002 

Maureen Singleton 
Budget Analyst Office 

Steven Lee y^s£ 
Principal Analyst 
Parking Authority 

File No. 02-0144, Resolution Approving Trail Rates as Permanent 
Rates at Various City Garages and Metered Parkin* Lots 



the 1 **? u re memorandura IS t0 address your questions reeardin* the o 
the 16 & Kofi Street Garage, the Revenues Projections for FY ?000-?003 anS r'h 
difterences between the Tnal Rates and the Proposed Permanent ~ Parkfn R ^ *' 



arage is jointly operated 



Hr onilT' 3 **"" ^ "* *" ^ "* H ° ff Street G ™ 

under one Management Agreement, dated October 1, 1997 betwe-n Parti™ r 

Inc./DAM inr anH ft,. r r t, tv x< . ' ' UCLWe -n Paring Concepts 

■-U. i, inc and the City. The Management Agreement also re-nir-eH rh- 
manage the 16 th x, w^ffc- *r u- l L " ■ required the operator to 

s<= m» io & Hon Street Garaee which at that time was a self mrv- rr,„, j 

" e "moved the paring mK ers and requested the ooerator ,o bean valr ST"* 
opcrafons a, the ,6* & Hoff Street Garage to increase parkins miiabuirv *- "' 

cornxnencea on March 1, 2001. Under the terms of the Management "c^n, ,h 

"*-i J-,^rr r ° 001 ~~^S" M67 ' 9:s 

« -thstrore t 2SSS SEEESEf' '" "* ^ ^ «* - «i 



10 



Attachment II 
Page 2 of 2 



File No. 02-0144 
February 20, 2002 
Page 2 of 2 

We feel that the services provided to the community by the 16 th & Hoff Street Garage 
greatlv improves the quality of life for the residents, merchants and visitors of that 
neighborhood and that this program is worthy of continuing despite the initial reduction 
in revenue to the City. 

In resard to the comparison of FY 2000-2001 Actual to the FY 2001-2002 Projected and 
the FY 2002-2003 Projected Parking Receipts, we project an increase of 576,038 or 
9/10* of a percent for FY 2001-2002 compared to FY 2000-2001 Actual. We project that 
FY 2002-2003 will be above the FY 2001-2002 by 5237,400 or 2.7 percent. 

Differences between Xjjaj Kntes anH Pro posed Permanent Parking Rates: 

Performing Arts Garage - Lost Ticket from 515.00 to 514.00. The Lost Ticket Rate 
should equal the 7.0-Hour Rate of 512.00 plus the Overnight Flat Rate of 52.00. 

' Civic Center Garage - No Difference. 

Eliis O'Farrell Garage - We propose adjusting the Sunday Day Rates to reflect the Mon.- 
Sat. Dav Rates with a Maximum Sunday Day Rate of 56.00. The Lost Ticket and 24- 
Hour Maximum of 51 1.00 for Sundays reflect the Maximum Sunday Day Rate of 56.00 
plus the Maximum Evening Rate of S5.00. 

1 6' h & Hoff Street Garage - We propose to discontinue the All Day Rates and implement 
Day Rates and Evening Rates to balance the needs of the community and the demand for 
parkins at the garage. The initial Trial Rates attracted too many long-term patrons and 
the second Trail Rates caused the garage to be underutilized because the patrons are 
either unwilling or could not afford to pay the rates. Please note that all Transient 
vehicles are vatet parked and Monthly patrons self-park on the roof level. 

Metered Parking Lots - No Difference. 

Please do not hesitate to call me at 554-9869 if you have any questions or concerns. 



H P A RJCrNCr. Rates-Memo (0 M.Singleton re permanent ram 2- 20-0 2 Joe 



Attachment III 



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12 



iR. -Or 021THU) 16:22 CITY Sc CO OF S. F. PARKING DEPT TEL . Attachment IV 

Page 1 ol h 

City and County of San Francisco 



FRANCISCO 




DEPARTMENT OF PARKING 1 TRAFFIC 




WILLIE LEWIS BROWN. JR^ Mayor 

FRED M. HAMDUN. EXECUTIVE DIRECTOR 

RONALD S2ETO, ACTING DIRECTOR, PARKING AUTHORITY 



DATE: March 7, 2002 

TO: Maureen Singleton, Analyst 

Budget Analyst's Office 

FROM: Ronald Szeto, Acting Director Dn 

Parking Authority ' 

RE: Trial Parking Rates File No. 02-0144 



The purpose of this memorandum is to provide a status update on the 121 Q'Farrell Street 
ground floor commercial space per your request. This request was initiated at the 
February 27, 2002 Finance Committee meeting of the San Francisco Board of 
Supervisors in conjunction with consideration of trial parking rates at the Ellis O'Farrell 
Garage (File No. 02-0144). 

It is important to note that the parking rates being considered are only applicable to our 
parking patrons and have no relationship to the ground floor commercial space lease in 
question. 

Pursuant lo the 1992 Lease between die City and County of San Francisco and the City of 
San Francisco ElIis-O'Farrcll Parking Corporation (the "Corporation"), the Corporation 
is authorized to lease commercial spaces within the Ellis-O'Farrell Garage (the 
"Garage"). 

At the February 5, 2002 Parking and Traffic Commission meeting, Mr. Jerome Garchik, 
attorney representing 15-20 small business owners of the 121 O'Farrell site 
(subsequently known as 121 O'Farrell Merchants Association "Merchants"), reported 
thai his clients are getting evicted. Mr. Garchik further states that the Corporation is 
seeking "dot com" boom or rent increases and is looking for a high profile tenant. Mr. 
Steven Wally, owner of Jewelry By Steven since 1984 at the 121 O'Farrell site, also 
commented at the meeting. Mr. Wally asked the Parking and Traffic Commission to 
provide some assistance to the Merchants from being evicted. The Department of 
Parking and Traffic offered to review the situation and provide assistance tc the small 
business owner. 



15) 5S4-PARK FAJC (41 S) 554-88:14 25 Van Nobs Avanuo. Sulla 410 San Franclaco CA 84103-1176 

13 



MA&-.07 02ITHI'] 16:22 CITY Sc CO OF S. F. PARKING DEPT Attachment I 

Page 2 or. 4 



Maureen Singleton 

3-7-02 

Paee 2 of 4 



Finding 

• The Corporacion has a lease agreement with Wholesale Jeweler's Exchange, LLC. 
("WJE") for the 121 O'Farrell commercial space (4,483 square fee:). The WJE sub- 
leases the commercial apace to the Merchants. 

• On May 1, 2000, the Corporation and WJE agreed to amend the original 1997 lease to 
terminate said lease on May 3 1 , 200 1 . Thereafter, the lease was amended to a month- 
to-month basis with either party having the right to terminate with 60-days written 
notice. Subsequently, on December 24, 2001, WJE gaye termination notices to the 
Corporation and to the Merchants effective February 28, 2002. In addition, WJE 
gave at least three (3) other updates/notices to the Merchants regarding the 
termination of the lease. (Attached are the Notices) 

• Corporation, in preparation of renting the 121 O'Farrell commercial space, started a 
solicitation process for an exclusive broker. 

• At the Corporation's June 28, 2000 meeting, the Corporation selected Blatteis Really 
to advertise the commercial space and subsequently executed a 6-month listing 
agreement commencing September 5, 2000. 

• Blatteis advertised the commercial space and in October 2000, posted "For Lease" 
signs above the main entrance of the commercial space. 

• Some of the small business owners of the 121 O'Farrell space started searching for a 
new business location. 

• Jn February 2001, the Parking Corporation granted Blatteis an extension to the listinc 
agreement until September 5, 2001 . 

• In September 2001, the tenant of the 133 O'Farrell commercial space (1,127 square 
fee:) was evicted for non-payment of rent and the 133 O'Farrell site became 
available. 

• In September 2001, Blatteis identified Saab Cars USA, Inc. as the only interested 
parry, with sufficient funding, for the 121 O'Farrell site. Since then the Parking 
Corporation has been in a good faith negotiation with Saab. Alihoueh there are not 
any explicit non-interference clause, the good faith negotiation implies that the 
Corporation and Saab would negotiate until a conclusion is reached. 

• On October 15, 2001, subject to the Saab good faith negotiations, the Corporation 
executed a listing agreement with a new broker, DtChiara Sc Wright Realty Services 
for the marketing of both the 121 and 133 O'Farrell sites. 



Attachment IV 
Page 3 of 4 



Maureen Singleton 

3-7-02 

Paae 3 of 4 



On October 17, 2001 Board of Directors meeting, the broker presented eight offers 
(of which three were made by 121 O'Farrell small business owners). In November 

2001, the Corporation executed a ten (10) year lease, commencing on January 1, 

2002, for the 133 O'Farrell site with a partnership comprised of an established outside 
jeweler and one of the small business owners of the 121 O'Farrell site. The small 
business is and still will continue to sub-lease space from WJE until the build-out of 
the 133 O'Farrell site is completed (until March 31, 2002). The small business owner 
reported that several other merchants verbally agreed to rent a portion of the 133 
O'Farrell site. 

On December 24, 2001, as mentioned above, WJE served notice of termination 
(effective February 28, 2002) to the Merchants for the 121 O'Farrell site. 

On February 5, 2002 Parking and Traffic Commission meeting, representative of the 
small business owners commented that they were being evicted from a public 
property without proper notice and asked the Parking and Traffic Commission for 
assistance. 



Options 

• What appears as a straightforward request by the Merchants became very complicated 
as we began our assistance. 

• There are seven (7) separate parties involved in these two commercial spaces. The 
City, the Corporation, WJE, the Merchants, the brokers, Saab, and the partners of the 
133 O'Farrell site. 

• The City and the Corporation do not have legal authorization to dictate terms and 
condition involving the contractual relationship between WJE and the Merchants. 

• If the City directs the Corporation to terminate their good faith negotiations with Saab 
and conduct exclusive negotiations with the Merchants, then the City would be 
interfering in a contractual relationship and together with the Corporation could be 
liable for all costs incurred by Saab and brokers. Also, the City maybe liable for 
damages to the partners of the 133 OTarrell site. Furthermore, the City would 
reward tenants who failed to act responsibly in seeking new business locations and 
would punish the 133 O'Farrell partners merchants who did act responsibly in 
moving into the 133 O'Farrell site. If the City decides to pursue this option, the 
Department of Parking and Traffic recommends that the Merchants shall indemnify 
the City and the Corporation, and that the Merchants shall be fully responsible for any 
and all subsequent liability, including but not limited to, damages mentioned above. 

15 



MAP. :0"' Q2ITHU) 18:22 CITY k CO OF S. F. PARKING DEPT Attachment IV 

Page 5 5t 5 



Maureen Singlecon 

3-7-02 

Pag---4of4 

In addition, the Merchants shall secure proper insurance and bonds to fulfill the 
indemnification requirement. 

• Since the lease agreement with WJE would have expired on February 28, 2002, the 
Department of Parking and Traffic encouraged the Corporation and WJE to extend 
the lease agreement for 60-90 duys. The Corporation through WJE proposed a 90- 
day extension for the Merchants under the same terms and conditions. 

• The Merchants are urged to use this rime to explore any and all options. The 
Department of Parking and Traffic suggests that the Merchants contact the Fifth and 
Mission Garage for available commercial spaces as another option. 

• If tie City allows the Corporation to continue their good faith negotiations with Saab, 
the City would not be liable for any potential damages. The Merchants would have at 
least 90 days to explore other options. Since the market conditions are favorable to 
renters, the Merchants may find a better location at a reasonable rent. The partners of 
133 O'Farrell would continue to conduct business as usual from the 121 or 133 
O'Farrell sites. If the good faith negotiations with Saab were to break off naturally, 
then the Merchants will have a second opportunity to participate for this site in a 
competitive process. 



Cc: Fred Hamdun, Executive Director, DPT 

Diana Hammons, DPT 
Daniel Hwang. Small Business 
Richard Dole, Ellis-O'Farrcll Corporation 
Honorable Members. Parking and Traffic Commission 
Honorable Members, Board of Super/laors 



K.TAaiCNG»IUlri\momo 10 M <inBl=u>n re 121 Crf orrcll (F.O).Joc 



16 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

Item 2 - File 02-0390 

Note: This item was continued by the Finance Committee at its meeting of March 
27, 2001. 

1. The proposed ordinance would amend Section 16.703 of the Administrative 
Code to approve the City's FY 2002-2003 Health Service System plans and rates of 
contributions, as adopted by the Health Services Board, to be paid by members of 
the System. The members of the System include employees and members of Boards 
and Commissions, retirees, and the spouses, domestic partners, dependents, and 
surviving spouses of these groups for the City and County of San Francisco, 
Community College District, and the San Francisco Unifiec 1 School District. 

Health Plans 

2. The Board of Supervisors previously adopted a resolution (File 02-0096) 
setting the City's contribution to the Health Service Fund for FY 2002-2003 at 
$246.69 per month for each member. The City's contribution was established in 
accordance with Charter Sections A8.423 and A8.428, which set the average 
contribution rate based on a survey of the 10 most populous counties in California 
(excluding San Francisco). The City's contribution of $246.69 per month ($2,960.28 
annually) represents an increase of $32.76 per month, or approximately 15.3 
percent, from the FY 2001-2002 rate of $213.93 per month ($2,567.16 annually). 

3. Once the City's contribution is established, member contributions are 
calculated by the Health Service System actuary, Towers Perrin, Consulting 
Actuaries, in order to ensure that contributions from all sources will be adequate to 
support anticipated claims for the upcoming fiscal year. This report is based on data 
provided by Towers Perrin in a March 8, 2002 letter to the Board of Supervisors. 
The proposed ordinance would establish member contribution rates for FY 2002- 
2003 in accordance with Charter Sections A8.421 and A8.422. Contribution rates 
vary depending upon: (1) the member's status (active employee, retiree, etc.); (2) 
whether or not that individual has Medicare coverage; and (3) which of the City's 
health plans the member elects to join. The actuarial report and details of the 
member contribution rates are contained in the file of the Clerk of the Board. 

4. Ms. Yvonne Hudson of the Health Service System advises that as of March 
1, 2002, 38,474 active employees, including San Francisco Unified School District 
and the Community College District employees, were covered by the System, with 
an additional 1,399 who chose not to be covered but who may request coverage in 
the future. Ms. Hudson advises that the System covers 15,368 retirees and that an 
additional 977 retirees are eligible to request coverage. 

The City Health Plan (which is administered by the City's Health Service 
System) and Kaiser, Health Net, and Blue Shield (all HMOs) will be offered in FY 
2002-2003. The Health System Board voted to offer Blue Shield coverage to retirees 

Board of Supervisors 
Budget Analyst 

17 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

for the FY 2002-2003 year to increase the options available to retirees. In FY 2001- 
2002, retirees' plan choices were limited to the City Health Plan, Health Net and 
Kaiser. 

5. Changes to the City Health Plan benefits in FY 2002-2003 include: 

• Coverage for hearing aids was increased to a $2,500 maximum benefit 
during any three-year period. Hearing aids were previously subject to an 
annual $1,000 maximum. 

6. The following changes were made in benefits for FY 2002-2003 HMO 
members: 

Blue Shield 

• Pharmacy copay increased from $5 to $10 for formulary 1 brand-name 2 
drugs and $15 to $20 for non-formulary drugs. The pharmacy copay for 
formulary generic 3 drugs remained at $5. 

• Hearing aid benefit limit increased from $1,000 to $2,500 per three-year 
period. 

• Infertility benefit modified from one course of treatment per plan year to 
three courses of treatment per lifetime. 

Health Net 

• Pharmacy copay increased from $5 to $10 for formulary brand-name 
drugs and $15 to $20 for non-formulary drugs. The pharmacy copay for 
formulary generic drugs remained at $5. 

Kaiser 

• Pharmacy copay increased from $5 to $10 for brand-name drugs. The 
pharmacy copay for generic drugs remained at $5. 

• Hearing aid benefit limited to $2,500 every three years. Previously the 
benefit was unlimited. 

• Infertility benefit modified from gamete intrafallopian transfer (GIFT) 
only to three courses of in-vitro fertilization, GIFT or zygote intrafallopian 
transfer (ZIFT) per lifetime at 50% copay. 



1 A formulary is a list of both generic and brand name drugs that are preferred by a health plan. 
Health plans will choose formulary drugs that are just as safe and effective as drug alternatives but 
cost less. 

2 A brand-name drug is supplied by one company (the pharmaceutical manufacturer). The drug is 
protected by a patent and is marketed under the manufacturer's brand name. 

3 A generic medication is a copy of the brand name drug that can be sold after a manufacturer's drug 
patent expires. A generic drug is marketed under its chemical name. 

Board of Supervisors 
Budget Analyst 

18 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

7. A comparison of the FY 2001-2002 monthly rates to be paid by active City 
employees with the FY 2002-2003 rates adopted by the Health Service Board is 
shown on Table 1: 



Table 1 
Monthly Health Plan Rates to be Paid by Active City Employees 
FY 2001-2002 and FY 2002-2003 





2001-2002 


2002-2003 


Monthly 


Percentage 




Monthly 


Monthly 


Increase/ 


Increase 




Rates 


Rates 


(Decrease) 


(Decrease) 


Citv Health Plan 










Single Employee 


$104.86 


$118.85 


$13.99 


13.3% 


Employee plus one dependent 


328.72 


482.39 


153.67 


46.7% 


Employee plus two dependents 


559.47 


774.81 


215.34 


38.5% 


Kaiser 










Single Employee 


0.00 


0.00 


0.00 


0.0% 


Employee plus one dependent 


203.25 


237.10 


33.85 


16.7% 


Employee plus two dependents 


371.95 


433.89 


61.94 


16.7% 


Health Net 










Single Employee 


3.27 


18.07 


14.80 


452.6% 


Employee plus one dependent 


219.51 


281.87 


62.36 


28.4% 


Employee plus two dependents 


399.66 


501.45 


101.79 


25.5% 


Blue Shield 










Single Employee 


5.17 


3.10 


(2.07) 


(40.0%) 


Employee plus one dependent 


223.28 


251.89 


28.61 


12.8% 


Employee plus two dependents 


404.24 


458.02 


53.78 


13.3% 



See Comment No. 1 for discussion of the potential impact of MOUs on 
employee's contributions. 

8. A comparison of the FY 2001-2002 monthly rates paid by retired City 
employees who are enrolled in the Health Service System with the proposed FY 
2002-2003 rates adopted by the Health Service Board is shown on Table 2 on the 
following page: 



Board of Supervisors 
Budget Analyst 

19 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Table 2 

Monthly Health Plan Rates to be Paid by Retired City Employees 

FY 2001-2002 and FY 2002-2003 



2001-2002 2002-2003 Monthly Percentage 



City Health Plan 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



Monthly 
Rates 

$52.43 
164.36 

27.43 
127.31 



Monthly 
Rates 

$59.42 
241.19 

32.42 
166.29 



Increase/ Increase 
(Decrease) (Decrease) 



$6.99 
76.83 

4.99 

38.98 



13.3% 
46.7% 

18.2% 
30.6% 



Kaiser Health Plan 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



0.00 


0.00 


0.00 


0.0% 


101.62 


118.55 


16.93 


16.7% 


0.00 


0.00 


0.00 


0.0% 


52.73 


94.71 


41.98 


79.6% 



Health Net 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



1.63 


9.03 


7.40 


454.0% 


09.75 


140.93 


31.18 


28.4% 


0.00 


0.00 


0.00 


0.0% 


94.63 


136.02 


41.39 


43.7% 



Blue Shield 

Single Subscriber (w/o Medicare) 
Subscriber plus one dependent 
(both w/o Medicare) 
Single Subscriber (w/ Medicare) 
Subscriber plus one dependent 
(both w/ Medicare) 



1.55 
125.94 

0.00 
183.73 



9. The increases for Medicare retirees are dictated largely by the formula by 
which HMOs are reimbursed for Medicare members by the Federal Centers for 
Medicare and Medicaid Services (CMS, formerly the Federal Health Care Financial 
Administration). In the past, CMS reimbursement enabled the HMOs to provide 
health care to Medicare retirees at a reasonable cost; however, the Federal 
Balanced Budget Act of 1997 changed the formula used to calculate the HMOs' 

Board of Supervisors 
Budget Analyst 

20 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

reimbursements. The result was that CMS reimbursements are no longer keeping 
pace with the cost of health care, and the HMOs make up the shortfall by increasing 
premiums paid by retired City employees. 

VISION PLAN BENEFITS 

10. Members enrolled in any of the medical plans offered by the Health 
Services System also receive vision benefits. All Kaiser members receive vision 
benefits from Kaiser. All other medical plan enrollees receive vision benefits insured 
by Vision Service Plan (VSP). Vision plan enrollment is combined with medical plan 
enrollment, and the cost of the vision benefit is a component of the cost of the 
medical plan. 

VSP offered the City a 7% decrease in premium rates, with the new rates 
guaranteed for 24 months through June 30, 2004. There were no changes in the 
benefits offered by VSP. 

DENTAL PLAN BENEFITS 

11. The Health Service System will continue to offer three dental plans to 
members: an indemnity plan administered by Delta Dental and two prepaid plans, 
PMI and Pacific Union. The City pays the full cost of Dental benefits for active 
employees. The Health Service System, effective July 1, 2001, no longer offers 
dental coverage to the Community College and San Francisco Unified School 
District because these employees are offered dental coverage through their 
respective employers. 

According to Ms. Hudson, as of March 1, 2002, 28,773 active employees were 
enrolled in City dental plans and 6,518 retirees were enrolled in dental plans. 

12. The Delta Dental Plan for active employees is self-insured and Towers 
Perrin's evaluation of claim experience determined that no change should be made 
in the rates used by the City to fund the plan. In addition, Delta Dental requested 
no change in the rates for the insured plan for retirees. PMI requested no change in 
active employees and retirees rates. Pacific Union requested no change in active 
employees and retirees rates. 

13. While retirees may choose from the same three dental plans, the benefits 
and rates differ from those for active employees. 

14. A comparison of the FY 2001-2002 and FY 2002-2003 monthly premium 
rate schedules for employer contributions of the three dental plans is shown below 
in Table 3, and indicates that there would be no changes in dental plan rates: 

Board of Supervisors 
Budget Analyst 

21 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Table 3 
Monthly Dental Plan Rates to be Paid by the City for 
Active City Employees FY 2001-2002 and FY 2002-2003 



2001-2002 2002-2003 Monthly Percentage 



Delta Dental 

Single Employee 

Employee plus one dependent 

Employee plus two dependents 

PMI 

Single Employee 

Employee plus one dependent 

Employee plus two dependents 

Pacific Union 
Single Employee 
Employee plus one dependent 
Employee plus two dependents 



Monthly 


Monthly 


Increase/ 


Increase 


Rates 


Rates 


(Decrease) 


(Decrease) 


$55.26 


$55.26 


$0.00 


0.0% 


90.80 


90.80 


0.00 


0.0% 


136.51 


136.51 


0.00 


0.0% 


22.17 


22.17 


0.00 


0.0% 


36.58 


36.58 


0.00 


0.0% 


54.09 


54.09 


0.00 


0.0% 


25.71 


25.71 


0.00 


0.0% 


42.44 


42.44 


0.00 


0.0% 


62.76 


62.76 


0.00 


0.0% 



Board of Supervisors 
Budget Analyst 



22 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



15. A comparison of the monthly premium rates to be paid by retired City 
employees for the FY 2001-2002 and FY 2002-2003 dental plans is shown below in 
Table 4, and reflects that there would be no changes in dental plan rates: 

Table 4 

Dental Plan Monthly Premiums to be Paid by Retired City Employees 

FY 2001-2002 and FY 2002-2003 





2001-2002 


2002-2003 


Monthly 


Percentage 




Monthly 


Monthly 


Increase/ 


Increase 




Rates 


Rates 


(Decrease) 


(Decrease) 


Delta Dental 










Single Retiree 


$33.76 


$33.76 


$0.00 


0.0% 


Retiree plus one dependent 


67.60 


67.60 


0.00 


0.0% 


Retiree plus two dependents 


102.11 


102.11 


0.00 


0.0% 


PMI 










Single Retiree 


28.09 


28.09 


0.00 


0.0% 


Retiree plus one dependent 


46.35 


46.35 


0.00 


0.0% 


Retiree plus two dependents 


68.55 


68.55 


0.00 


0.0% 


Pacific Union 










Single Retiree 


15.24 


15.24 


0.00 


0.0% 


Retiree plus one dependent 


25.16 


25.16 


0.00 


0.0% 


Retiree plus two dependents 


37.20 


37.20 


0.00 


0.0% 


Comments 











1. Many of the City's MOUs include provisions whereby the City pays a 
portion of the employee's contribution for health and dental benefits. Such 
payments by the City are not reflected in the data provided by the Health Service 
System shown in the tables of this report. Ms. Donna Marchuk of the Department of 
Human Resources advises that the majority of City workers are covered by MOUs 
which provide in FY 2002-2003 that the full employee premium for single employees 
is paid by the City and up to 75 percent of the rate of the employee costs for Kaiser 
coverage for the employee plus two dependents is paid by the City. Ms. Hudson 
notes that 75 percent of the employee costs for Kaiser coverage for the employee 
plus two dependents was $278.96 in FY 2001-2002 (.75 x $371.95) and will be 
$325.42 in FY 2002-2003 (.75 x $433.89). 

As a result, contrary to the data shown in Table 1, many of the City's MOUs 
provide that single employees enrolled under the City Health Plan paid nothing in 
FY 2001-2002 (instead of a rate of $104.86 per month) and would again pay nothing 

Board of Supervisors 
Budget Analyst 

23 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

under the proposed FY 2002-2003 rates (instead of the rate of $118.85 per month). 
Furthermore, many of the City's MOUs provided that employees with one 
dependent enrolled in the City Health Plan in FY 2001-2002 paid $49.76 per month 
(City Health Plan rate of $328.72 less the City paid benefit of $278.96) instead of 
$328.72 and would pay $156.97 per month (City Health Plan rate of $482.39 less 
the City paid benefit of $325.42) instead of $482.39 in FY 2002-2003. 

Ms. Marchuk reports that, to date, two of the City's 46 MOUs remain to be 
renegotiated this year and each will be retroactive, covering the period of July 1, 
2001 through June 30, 2003. Ms. Marchuk also notes that the Underrepresented 
Employees Ordinance remains to be renegotiated for FY 2002-2003. These MOUs 
and the Underrepresented Employees Ordinance will be subject to the approval of 
the Board of Supervisors. 

2. The Towers Perrin report notes several actions intended to minimize the 
potential for errors in employee communications and in plan administration: 

• All vendors were asked to provide their signed acceptance of the rates to be 
used by the Health Service System. These approvals have been obtained and 
are on file with the Health Service System staff. 

• Towers Perrin is reviewing the contribution tables to be included in the open 
enrollment communications that will be provided to employees and retirees. 

• Towers Perrin will be reviewing the rates entered into the Health Service 
System's Membership Accounting System (MAS) to ensure the accuracy of 
the data entered into the MIS, including health care plan costs, City 
contributions and employee contributions. 

3. The Towers Perrin letter concludes that the actions taken by the Health 
Service Board in the areas of benefit design, rating and reserving are consistent 
with Towers Perrin's recommendations and conform to a reasonable actuarial 
standard of plan management. Mr. Michael Kramer of Towers Perrin advises that 
"reserving" means the calculation of the amount of money that the Health Services 
Trust Fund needs to maintain to cover its obligations for claims incurred but not yet 
paid and for anticipated fluctuations in claims. 

4. In response to questions raised at the March 27, 2002 Finance Committee 
meeting, Ms. Yvonne Hudson, the Deputy Director of the Health Service System, 
has provided the attached memorandum. As noted on the Attachment, Ms. Hudson 
reports that the Health Service System Trust Fund balance as of June 30, 2001 is 
$34,768,366, which includes a $22.9 Trust Fund surplus and a $11.9 million reserve 
for any unanticipated fluctuations in claims. The total targeted Trust Fund 
Reserve, however, Ms. Hudson notes is $22.8 million, which includes (1) a $10.9 
million reserve for anticipated dental claims against the Delta Dental Plan and 

Board of Supervisors 
Budget Analyst 

24 • 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

medical and pharmacy claims against the City Health Plan, also referred to as 
claims incurred but not reported (IBNR), and (2) the above-noted $11.9 million 
reserve for any unanticipated fluctuations in claims. Ms. Hudson advises that the 
total targeted Trust Fund Reserve is based on the experience of Towers Perrin with 
similar large, public and private single-employer trust funds throughout the nation 
and the City Charter's requirement that the Health Service System Fund carry 
sufficient resources to pay all City Health Plan claims. Ms. Hudson notes that there 
are few trust funds in other jurisdictions which are truly comparable with San 
Francisco's Health Service System Trust Fund because the City Charter prevents 
the Health Service System Fund from drawing on the General Fund to pay for 
claims incurred under the City Health Plan, in the event that the Trust Fund 
cannot meet its obligations. As a result, Ms. Hudson reports, the targeted Trust 
Fund Reserve (presently $22.8 million) of the Health Service System Trust Fund 
requires higher balances than the trust funds of other large single-employer trust 
funds. 

Ms. Hudson notes that the Health Service System Trust Fund surplus has 
allowed the Health Service Board to increase the subsidy of the member rates for 
the City Health Plan from $1.5 million in FY 2001-2002 to $3.0 million in FY 2002- 
2003. For example, according to Ms. Hudson, for a single employee covered by the 
City Health Plan, the employee's contribution was reduced by $25.81 per month, 
from $144.66 per month (without such a subsidy) to the rate shown in Table 1 of 
$118.85 per month. As noted in the Attachment, the $3.0 million subsidy for the 
City Health Plan rates for FY 2002-2003 represents approximately 13 percent of the 
$22.9 million of the Trust Fund surplus. As further noted by Ms. Hudson in the 
Attachment, it is advisable to spread the Trust Fund surplus against Health Service 
System member rates over several years in order to reduce the impact of member 
contributions when the subsidy may no longer exist. Ms. Hudson reports that the 
Health Service Board favored providing a subsidy only for members enrolled in the 
City Health Plan and not for the three HMO medical plans, which are offered to 
employees by the City, because the Trust Fund is assuming all of the risks related 
to the City Health Plan, and the Trust Fund does not assume risks related to the 
HMO plans. 

Ms. Hudson advises that the Health Service Board also voted to continue for 
FY 2002-2003 all of the same dental plan rates that existed during FY 2001-2002 
and the application of a subsidy from the Trust Fund for such dental rates was not 
considered. 

Ms. Hudson reports that the significant increase in member rates in some of 
the City's health plans being offered to members is due to the overall increase in 
medical and pharmacy costs coupled with the Health Service Board's decision to 
institute rate realignments for the City plan and the HMOs, which increased costs 
for both employees with dependents and retirees without Medicare, to more 

Board of Supervisors 
Budget Analyst 

25 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

accurately reflect the health care costs of active employees, employees with 
dependents and non-Medicare retirees. Furthermore, Ms. Hudson reports that the 
increase in rates for HMO coverage was due to the increased rates requested by the 
HMOs, which Towers Perrin determined to be justified. Ms. Hudson notes that the 
increased costs for retirees with Medicare were largely dictated by the formula for 
which HMOs are reimbursed by the U.S. Centers for Medicare and Medicaid 
Services. Ms. Hudson further advises that dental rates did not increase because 
Towers Perrin's evaluation of the most recent claim experience determined that no 
change should be made in the City's self-insured dental plan (Delta Dental) and 
neither PMI nor Pacific Union requested a change in the dental rates. 



Recommendation 



Approve the proposed ordinance. 



Board of Supervisors 
Budget Analyst 

26 



jcoi_t!j crpuiCE SYSTB1 



HUMRN 
R6SOWRC6S 

Andrea fi. Gourdme. Hurno/> Aesources Director 



Attachment 
Page 1 of 4 



April 2, 2002 



TO: 



Harvey Rose, Budget .Analyst 
Board of Supervisors 



FROM: 



SUBJECT: 



Yvonne S. Hudson, Deputy Directo 
Health Service System 



Jfls 



RESPONSES TO QUESTIONS REGARDING HEALTH PLAN 
RATES FROM MARCH 27, 2002 FINANCE COMMITTEE 
MEETING 



Following are answers to the seven questions asked by the Board of Supervisors Finance 
Committee dining the March 27, 2002 meeting. The answers have been extracted from 
the more comprehensive document prepared by Towers Perrin dated April 2, 2002. The 
questions axe followed by the page number(s) where more detail can be found. 



1) What is the balance in the Health Service System fund now? (page B-l) 

Based on final financial statements for June 30, 2001 and 2000, the net assets 
available for health benefits at June 30, 2001 are $34,768,366. 

2) What is the appropriate fund balance? (page B-2) 

The table below shows the development of the reserve for claims IBNR and the target 
reserve. The reserve for claims IBNR was based on the most recent information 
available from the City's claims administrators-HSS, Express Scripts and Delta 
Dental-regarding claims paid and incurred. 

Table B-2 
Development of Reserves as of June 30, 2001 



IBNR Reserve 


Target Reserve 


Months I Dollars* 


Months 


Dollars* 


City Plan 1 Medical 


3.3 I S7.7 


6.0 


$13.5 


City Plan 1 Pharmacy 


0.5 0.4 


2.0 


1.6 


Delta Dental 


1.4 2.8 


4.0 


7.7 


Total 


S10.9 




$218 



* All dollar amounts are shown in millions 



23. 



fhPP-O2-2G02 17: 11 HEALTH SERUICE SYSTEM 

Attachment 
Page 2 of 4 

3) Can proposed member rate increases be reduced by using some of the Health 
Service System's fund balance? (page B-l) 

The Health Service Board voted to apply $3 million, or 13%, of the $22.9 million 
trust fund surplus (balance after reserves) to subsidize City Plan 1 rates for the 2002- 
03 plan year. We note that a subsidy of $ 1 .5 million is currently in place for the 
2001-02 plan year. These subsidy amounts were chosen for the following reasons: 

■ This portion of the surplus could safely be attributed to the operation of City Plan 1. 

■ Conservatism is dictated because of the trust fund's limited ability to raise money in 
the event of a shortfall in revenue. 

■ It is advisable to spread over several years the application of trust fund surplus against 
rates to reduce the impact on members' contributions when the subsidy terminates. 

4) What are the reasons for the significant increased rates in a) the monthly health 
plan rates to be paid by active city employees (Table 1 in my report) and b) 
monthly health plan rates to be paid by retired city employees (Tabic 2 in my 
report)? (pages 1-11; A-l-A-5) 

City Plan 1 

Claim experience adjusted for the changes in benefits and enrollment that occurred 
effective July 1, 2000, dictated a 36.0% increase in the medical component of Plan 1 and 
a 28.3% increase in the pharmacy component. Medical and pharmacy costs, together, 
resulted in the following changes: 

■ A 34.2% increase in combined medical and pharmacy costs for active employees 

■ A 3 1 .8% increase for non-Medicare retirees. 

■ A 37.2% increase for Medicare retirees. 

The following change was made in Plan 1 benefits: 

■ Coverage for hearing aids was increased to $2,500 maximum benefit during any 
three-year period. Hearing aids were previously subject to a $1,000 maximum. 

Current rates for adult dependents, of both employees and non-Medicare retirees, are 
understated. For the 2002-'03 plan year, the Health Service Board approved realignment 
of these dependent rate tiers so that the rates will more accurately reflect the cost of these 
members. 

Contributions (the members' out-of-pocket payments) for Plan 1 members-employees 
and retirees-were determined as dictated by the City Charter. Employees and retirees 
covered under Plan 1, include the effect of rate changes, plan changes, rate tier 



28 



<-pp- 02-2002 17: 11 HEALTH SERU ICE SYSTEM 

Attachment 
Page 3 of 4 

realignment, negotiated City contributions, the amount determined under the 10-County 
survey, and trust fund subsidy. 

HMOs 

Three HMOs are offered to HSS members: Health Net, Kaiser and Blue Shield. The 
HMOs submitted the following renewal requests: 

■ Blue Shield initially requested a 26% increase for active employees, which was 
subsequently reduced to 16.6% after negotiations. 

■ Health Net initially requested a 35% increase for employees and non-Medicare 
retirees, which was subsequently reduced to 3 1 .5% after negotiations. Health Net 
increased rates for Medicare retirees by 58.2%. 

■ Kaiser requested a 22.9% increase for employees and an 89.8% increase for Medicare 
retirees. 

We determined these requests (after negotiation) to be justified according to the data 
supplied by the HMOs. We also found them to be consistent with renewals for other 
similarly situated employers. The increases for Medicare retirees, while extremely 
unfavorable, are dictated largely by the formula by which HMOs are reimbursed for 
Medicare members by the Centers for Medicare and Medicaid Services (CMS, formerly 
"HCFA"). 

The following changes were also made to the plans: 

■ Rate Tier Realignment - previously, Health Net and Kaiser applied uniform rates to 
employees and non-Medicare retirees, resulting in overstated rates for active 
employees and understated rates for non-Medicare retirees. For the 20O2-'O3 plan 
year, the Health Service Board decided to separate these rates so that they more 
accurately reflect the cost of benefits for these two groups of members. 

■ Extending Blue Shield Coverage to Retirees - The Health Service Board voted to 
offer Blue Shield coverage to retirees for the 2002-'03 plan year. This change was 
made to increase the options available to retirees. 

• Replacing Health Net "Seniority Plus" with Medicare Supplement - Cost 

increases and service area reductions had reduced the attractiveness of Health Net's 
"Seniority Plus" plan for retirees with Medicare. The Health Service Board therefore 
voted to replace this plan with a Health Net Medicare Supplement Plan, which will 
provide the same benefits at a slightly lower cost but using a broader network. 

Member contributions are derived from these rates by subtracting the 10-County amount 
and any applicable negotiated subsidies. 



29 



(hPR-02-2002 17: 11 HEALTH SER'J ICE SYSTEM . . . 

• ' ' Attachment 

Page 4 of 4 

5) Why are there no rate increases in dental rates? (page 8) 

Three dental pLans are offered to HSS members: an indemnity plan administered by 
Delta Dental and two prepaid plans: PMI and Pacific Union. The City pays the cost 
of dental benefits for employees, while retirees pay the full cost of their dental plans. 

The rate process for the dental plans is similar to that described above in connection 
with the medical plans, except for the determination of member contributions. 

The Delta Dental plan for active employees is self-insured, and our evaluation of the 
most recent claim experience available determined that no change should be made in 
the rates used by the City to fund the plan. 

The City's per-employee contribution for dental benefits is based on the average cost 
of coverage for all employees. Since all dental plan rates will remain unchanged for 
2002-03, the City's contribution for 2002-03 will remain $92.77 per employee per 
monih. 

6) What is the comparable amount of the Health Service System fund balance at 
other jurisdictions? (page B-2) 

The target reserve was based on Towers Perrin's experience with similar trust funds; 
however, it should be noted that most single-employer trust funds, even those of public 
agencies, are not comparable to the Health Service trust fund for this purpose. The 
inability of the Health Service trust fund to draw upon the general resources of the City in 
the event of financial need requires conservatism in reserving beyond that typically 
required by other employers' trust funds. The most comparable trusts are therefore those 
maintained by multiple employers together, often pursuant to collective bargaining, or by 
associations. These typically target reserves of between 130% and 200% of IBNR. 

7) It is Supervisor Peskin's understanding that the balance now is S34 million and 
the last year was S18 million. How did last year's fund balance of $18 million 
and this year's fund balance of $34 million impact the proposed member rates? 
(page B-l) 

Please refer to the answer in question #3. 



30 



TnTCil P R.l 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Item 3 - File 02-0192 

Department: 

Item: 



Amount: 
Source of Funds: 
Description: 



Human Services 

Ordinance appropriating $47,000 from the General Fund 
Reserve to the Department of Human Services for Fiscal 
Year 2001-2002 to expand an existing contract with the 
Homeless Prenatal Program, a non-profit organization 
that provides housing placement services to homeless 
families and children, including pregnant and post- 
partum women. 

$47,000 

General Fund Reserve 

The proposed supplemental appropriation would provide 
$47,000 to the Department of Human Services (DHS) to 
expand an existing contract with the Homeless Prenatal 
Program, a non-profit organization that provides street- 
based outreach services to homeless families, including 
pregnant and post-partum women. According to Ms. 
Cindy Ward of DHS, such services include assistance in 
finding permanent housing, as well as continuing case 
management to help clients maintain housing. The 
proposed supplemental appropriation would allocate an 
additional $47,000 to the Homeless Prenatal Program 
agency to provide eligible homeless families with rental 
assistance grants to help pay for move-in costs such as 
security deposits and furniture. Ms. Ward advises that 
participants receive, on average, $800 to $1,200 per 
family. The Homeless Prenatal Program selects 
participants who are "housing ready," or demonstrate an 
ability to pay rent and maintain the housing. 

Ms. Ward advises that DHS first selected the non-profit 
organization, Homeless Prenatal Program, in January of 
1998 on a sole-source basis because, according to Ms. 
Ward, the Homeless Prenatal Program is the only 
organization in San Francisco that provides street-based 
outreach for homeless families and children combined 
with the rental assistance grant program discussed above. 
The current two-year contract from July 1, 2000 to June 
30, 2002 between DHS and the Homeless Prenatal 

BOARD OF SUPERVISORS 

BUDGET ANALYST 

31 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Program in the amount of $772,444 for the two-year 
contract term includes $374,472 for Fiscal Year 2000-2001 
and $397,972 for Fiscal Year 2001-2002, as shown in 
Attachment I, provided by DHS. The entire Fiscal Year 
2000-2001 contract amount of $374,472 was funded from 
General Fund monies. Of the total Fiscal Year 2001-2002 
contract amount of $397,972, $264,972 was funded from 
General Fund monies and $133,000 was funded from 
Proposition 10 State funds 1 . 

During the first year of the two-year contract with the 
Homeless Prenatal Program agency, or Fiscal Year 2000- 
2001, the $374,472 contract originally included $75,000 in 
General Fund monies to provide rental assistance grants 
to families and children, according to Ms. Ward (included 
in Operating Expenses in Attachment I). As explained in 
the attached memorandum from DHS (Attachment II), 
DHS provided an additional $32,500 for rental assistance 
grants in January of 2001 from savings in the DHS 
budget from other contracts. The budget for rental 
assistance grants was increased again in May of 2001 
with a supplemental appropriation of $60,000 from the 
General Fund Reserve (File 01-0618), for a total amount 
of $167,500 in General Fund monies for rental assistance 
grants during Fiscal Year 2000-2001. During the second 
year of the two-year contract, Fiscal Year 2001-2002, the 
$397,972 contract included $183,000 for rental assistance 
grants, consisting of $50,000 in General Fund monies and 
$133,000 in State monies. The $183,000 budgeted for 
rental assistance grants in Fiscal Year 2001-2002 is 
$15,500 or 9.3 percent more than the $167,500 budgeted 
for rental assistance grants in Fiscal Year 2000-2001. 

Ms. Ward reports that for Fiscal Year 2001-2002, the 
Homeless Prenatal Program agency has expended a total 
of $138,962 at an average of $23,160 per month for six 
months, having provided 150 families with rental 



1 Proposition 10 established the San Francisco Children and Families First Trust Fund. This Trust 
P'und receives its funding from revenues collected from a $0.50 per pack State surtax on cigarettes 
and a $0.50 per pack State surtax on tobacco products. Such Trust Funds are to be expended on 
programs that promote, support and improve the early development of children from the prenatal 
state up to five years of age. Therefore, when applied to the subject rental assistance grant program, 
Proposition 10 funds can only be used to provide rental assistance grants to families with children up 
to the age of five. 

BOARD OF SUPERVISORS 
BUDGET ANALYST 

32 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



assistance grants averaging $926 each from July 1, 2001 
through December 31, 2001. Ms. Ward advises that the 
Homeless Prenatal Program agency has expended the 
Fiscal Year 2001-2002 allocation more quickly than has 
been planned due to increasing housing costs and because 
the non-profit organization was able to assist 150 families 
or 70 families more than the 80 families it had anticipated 
assisting. According to Ms. Ward, during the six-month 
period of January 1, 2002 to June 30, 2002, the Homeless 
Prenatal Program agency anticipates that it will expend 
$91,038 on rental assistance grants, including (a) $44,038 
in previously allocated contract funds ($183,000 budgeted 
less $138,962 expended during the first six months) and 
(b) this subject requested $47,000 supplemental 
appropriation, or an average of $15,173 per month 
($91,038 divided by 6). Ms. Ward reports that the $91,038 
allocated to the Homeless Prenatal Program would result 
in providing approximately 98 families with rental 
assistance grants at an average grant of $929 over the 
second six months of Fiscal Year 2001-2002. 

Ms. Ward states that although there is a need to serve an 
estimated 150 families during the last six months of 
Fiscal Year 2001-2002 at an estimated cost of 
approximately $139,000, as was provided for during the 
first six months of Fiscal Year 2001-2002, a policy 
decision was made by the Director of the Homeless 
Prenatal Program to spend a maximum of $91,038 in the 
last six months, thereby resulting in this subject request 
of $47,000 which would be added to $44,038 in unspent 
rental assistance grant funds, for a total of $91,038 
during the balance of Fiscal Year 2001-2002. According to 
Ms. Martha Ryan, Director of the Homeless Prenatal 
Program, the requested $47,000 supplemental 
appropriation would provide a sufficient level of funding 
to serve the eligible homeless families during this period. 
According to Ms. Ward, if the average grant need is lower 
than $929, then the Homeless Prenatal Program would be 
able to serve more families. Ms. Ward advises that the 
entire requested $47,000 would only fund rental 
assistance grants and would not be used to fund any 
salaries or overhead costs. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 






Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Comments: 



1. According to Ms. Ward, DHS intends to enter into a 
new contract in the amount of $401,327 in Fiscal Year 
2002-2003 with the Homeless Prenatal Program agency. 
According to Ms. Ward, DHS plans to allocate $183,000 of 
the $401,327 contract for rental assistance grants in 
Fiscal Year 2002-2003, the same amount as originally 
allocated in Fiscal Year 2001-2002. This would result in 
$47,000 less being expended in such rental assistance 
grants in Fiscal Year 2002-2003 when compared to Fiscal 
Year 2001-2002 after considering this subject request of 
$47,000. As previously noted, of the $183,000 allocation in 
Fiscal Year 2001-2002 prior to this request of $47,000, 
only $50,000 was from the General Fund. According to 
Ms. Ward, a similar General Fund allocation of $50,000 
would be made in Fiscal Year 2002-2003, with the balance 
of $133,000 ($183,000 less $50,000) being funded by the 
State. Ms. Ward states that DHS does not intend to 
request any additional supplemental appropriations from 
the General Fund for this rental assistance program for 
homeless families in Fiscal Year 2002-2003 beyond the 
initial Fiscal Year 2002-2003 General Fund allocation of 
$50,000. 



The following table shows the rental assistance grant 
amount and the total contract amount allocated for the 
Homeless Prenatal Program agency in Fiscal Years 2000- 
2001, 2001-2002 and 2002-2003: 





Fiscal Year 
2000-2001 


Fiscal Year 
2001-2002 


Fiscal Year 
2002-2003 


Rental Assistance Grants 


$167,500* 


$230,000** 


$183,000*** 


Total Contract 


$374,472 


$444,972**** 


$401,327 



* 100 percent General Fund 

** $97,000 General Fund including this subject request of $47,000 and $133,000 State funds 

*** $50,000 General Fund and $133,000 State funds 

'* Includes the proposed $47,000 supplemental appropriation plus the original allocation 
of $397,972 



2. As shown m the table above, if the proposed 
supplemental appropriation is approved by the Board of 
Supervisors, then the Homeless Prenatal Program would 
receive a total of $230,000, including $97,000 in General 
Fund monies and $133,000 in State monies, during Fiscal 
Year 2001-2002 for rental assistance grants, an increase 
of $62,500 or approximately 37.3 percent over the 

BOARD OF SUPERVISORS 
BUDGET ANALYST 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

$167,500 in General Fund monies appropriated for rental 
assistance grants in Fiscal Year 2000-2001. Also, as 
shown in the table above, $183,000, including $50,000 in 
General Fund monies and $133,000 in State monies, 
would be requested for such rental assistance grants in 
Fiscal Year 2002-2003. Therefore, the Budget Analyst 
notes that $47,000 less will be budgeted for the rental 
assistance grants in Fiscal Year 2002-2003 ($183,000) as 
compared to Fiscal Year 2001-2002 ($230,000). 

Recommendation: Given the annual fluctuations in the General Fund 

allocations for rental assistance grants provided to 
homeless families, the Budget Analyst considers approval 
of the proposed supplemental appropriation to be a policy 
decision for the Board of Supervisors. 



BOARD OF SUPERVISORS 
BUDGET ANALYST 



35 



ALiacnrr.e'iit l 
^age 1 ot 3 





A B C | D |F| 


G |H 1 |J| K L |M| 


N 


2 
3 

5 
6 
7 
? 
5 

10 

11 

12 
-3 
14 
15 

16 
17 
18 
19 
2C 
21 

22 

23 


Program Name: Housing Assistance 
(Same as Line 9 on DHS *1) 

Operating Expense Detail 

Mod 
Expenditure Category TERM 7/1/00-6/30/01 672001 


Appendix B, Page 3 
Document Date: 6/7/2001.2000 

Mod 

7/1/01-6/30/02 Apr-02 

S1 2.000 

52,400 

5960 


TOTAL 
7/1/00-6/30/02 


Rental of Property 

Utilibes(EJac, Water, Gas. Phone. Scavenger) 

Office Supplies. Postage 

Building Maintenance Supplies and Repair 

Printing and Reproduction 

Insurance 

Staff Training 

Staff Travel-(Local & Out of Town) 

Rental of Equipment 

CONSULTANT/SUBCONTRACTOR DESCRIPTIVE TITLE 


$12,000 


524.000 


S2.400 


S4.B00 


S960 


51 .920 




50 


S960 


5960 

5750 

51,500 

S960 


S1.920 


S750 


51.500 


J1.500 


53,000 


S960 


51.920 




SO 






50 


24 


SO 


25 


SO 


26 


$0 


27 


$0 


28 

29 


OTHER 

Support Services to Clients - Transportation 


52,750 


52,750 
54,500 
52.750 
5183,000 547,000 
55.400 
S1.000 


55,500 


33 


Emergency Houshg 


$14,500 


$19,000 


31 


Emergency food 


52.750 


55,500 


32 


Rental Assistance 


S75.000 S92.500 
55.400 


5397,500 


33 


Community Health Worker Stipend 


$10,800 


34 


Client credit checks J 


51.000 


S2.000 


35 


Modification Addition 7/1/2000 


57.000 


S7.000 


36 




37 
38 
39 

40 


total operating expense 
ohs»3 


5127,930 592,500 


5218,930 547,000 


54B6.360 


2/1/2000 



MOR-06-2002 13:07 



36 



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38 



Fage 1 or z 

fcy and County of San Francisco Department of Human Services 



Trent Rhorer 
Executive Director 

Deputy Directors 
Janice Anderson-Santos 

Jim Buick 
Sally Kipper 



Anna LaForte 

Budget Analyst's Office 

San Francisco Board of Supervisors 

1390 Market Street, Suite 1025 

San Francisco, CA 94102 

Dear Ms. LaForte: 

Please accept this letter in response to your request for information regarding the 
appropriation of additional funds requested by the Homeless Prenatal Program (HPP). 

DHS has contracted with HPP to provide housing search and move-in assistance to 
low-income and shelter families since January of 1998. In fiscal year 2000-2001, HPP 
received a budget of $75,000 to provide move-in grants. HPP spent all of these funds 
by December 2000. In order to meet the need for move-in grants, DHS provided an 
additional $32,500 to HPP in January 2001. In March 2001 HPP requested a 
supplemental allocation from the Board of Supervisors, and through this process 
received an additional $60,000 for move-in grants for FY 2000-2001. Therefore, the 
total budget provided to HPP for move-in grants in FY00-01 was $167,500. 

In FY 2001-2002, DHS provided a total of $183,000 to HPP through a combination of 
Proposition 10 funds from the SF Children & Families Commission and General 
Funds. DHS also worked with the program to establish controls in order to keep 
funding available throughout thfe contract penod. Part of this plan was to reallocate 
$25,000 of the $75,000 budgeted for move-in grants to a part-time staff person who 
would oversee distribution and reporting of the funds expended for move-in grants. 
This became effective as of FY 2001-2002. 

HPP now provides DHS with detailed information regarding direct assistance to clients 
on a monthly basis for invoicing purposes, including check numbers, recipient of check, 
amount of check, and which funding stream was used (Proposition 10 funds can only 
be used for families with children under the age of five.) HPP also submits quarterly 
reports on achievement of their service and outcome objectives. These reports include 
the number of families served, amount of funds expended, and a list of all clients 
receiving direct assistance and the amount the)' received. 



1557-5000 P.O. Box 7988 San Francisco, California 94120 

39 



Attachment II 
Page 2 of 2 



In order to be eligible for assistance, clients must provide documentation of and HPP 
must verify all information regarding the potential housing situation, including copy of 
lease/ rental agreement, landlord tax ID/proof of ownership, payment plan/receipt 
letter from landlord, client income verification, ID, social security number, and credit 
report. 

Even with the additional funds provided to HPP during this fiscal year and with the 
controls on spending that have been added to the HPP contract, HPP reports that they 
are facing a critical shortage of funds for move-in grants. In the first two quarters of 
this fiscal year, HPP assisted 150 families with move-in grants, and spent $99,181 in 
Prop 10 funds and $39,781 in GF dollars. HPP reports having to turn clients away 
every month. Based on funds remaining, additional clients will have to be turned away if 
additional funds are not provided. The additional $47,000 requested by HPP for the 
current fiscal year would increase their total budget to $230,000 for move-in grants and 
would increase the number of families assisted overall by 50-60 families. 

DHS plans to renew the contract with HPP for an additional two years, beginning 
7/1/02. The budget proposed by the DHS Commission in their FY02-03 budget 
request includes $183,000 for move-in grants through the HPP contract which is the 
same level of funding provided for move-in grants by DHS through the HPP contract 
in the current fiscal year. 

Please feel free to contact me at 558-2847 if you need further information. 



Cindy Ward 

Homeless Family Programs Manager 

SFDHS 



cc: 

Phil Arnold, DHS 
David Curto, DHS 
Maggie Donahue, DHS 
Martha Ryan, HPP 



40 



[emo to Finance Committee 

pril 10, 2002 Finance Committee Meeting 

,em 4 - File 02-0410 

fote: This item was continued by the Finance Committee at its meeting of March 
27, 2001. 



tepartment: 
iem: 



escription: 



Municipal Transportation Agency (Muni) 

Resolution authorizing a leveraged lease-leaseback 
transaction of up to 118 Muni light rail vehicles. The 
proposed resolution approves a variety of agreements 
required to execute the proposed transaction. The 
proposed resolution further: 

(1) approves the indemnification of various parties 

(2) acknowledges the waiver of the City's right to a jury 
trial under certain circumstances 

(3) acknowledges proposed waiver requirements pursuant 
to Sections 12B.5-l(d) and 12C.5-l(d) of the San 
Francisco Administrative Code with regard to certain 
agreements authorized by the proposed resolution 

(4) approves and authorizes the execution and delivery of 
any document necessary to implement the proposed 
resolution 

(5) ratifies and approves any action heretofore taken in 
connection with the transaction contemplated by the 
proposed resolution; and related matters. 

The proposed resolution authorizes Muni to conduct a 
leveraged lease-leaseback transaction of up to 118 of its 
Breda light rail vehicles. The Breda vehicles are currently 
in service on Muni Lines J, K, L, M, and N. The purpose 
of the proposed transaction is to provide one-time revenue 
to the City (Muni), estimated by Muni to be 
approximately $33 million. (See Comment No. 3.) 

The purpose of the proposed transaction is to leverage an 
asset that Muni already owns to generate one-time 
revenue of approximately $33 million. To do this, Muni 
would transfer the "tax ownership" of up to 118 of its 
Breda Light Rail Vehicles to a group of private investors 
consisting of CIBC Capital Corporation, Comerica 
Leasing Corporation, Wells Fargo Bank Minnesota, N.A. 
Australia and New Zealand Banking Group Limited. For 
purposes of the proposed transaction, this group of private 
investors is collectively known as the Equity Investors. 
Such a transfer would allow the private investors to 
depreciate the vehicles and deduct transaction-related 
expenses on their Federal income tax return and thereby 

Board of Supervisors 
Budget Analyst 

41 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



defer payment of Federal income taxes. In exchange for 
this benefit, the Equity Investors would pay Muni a one- 
time cash payment of approximately $33 million. 

Through the proposed transaction, Muni would lease up 
to 118 Breda LRVs that it currently owns to a Trust 
established by the Equity Investors (CIBC World 
Markets, Comerica, Wells Fargo, and ANZ). As explained 
in Attachment IV, six trusts would actually be formed. 
For the purpose of simplicity, this report refers to a single 
Equity Investors' Trust. The Trust would pre-pay Muni a 
lump sum representing the present value of the lease 
payments over the life of the lease, under the Head Lease 
agreement (with Muni as Lessor and the Trust as Lessee). 
The lump-sum payment would total $388.1 million and 
consist of approximately $102.6 million in an equity 
contribution to the Trust by the Equity Investors and a 
loan from a private Lender (FSA Global Funding Limited) 
to the Trust of approximately $285.5 million. The Trust 
would, in turn, sublease the vehicles back to Muni. 

Muni would deposit $355.1 million into two separate 
escrow accounts. One such account would be to repay the 
$285.5 million portion of the lump-sum payment received 
from the loan to the Equity Investors. The other escrow 
account would be $69.6 million to repay the equity portion 
of the lump-sum payment. The $69.6 million, combined 
with interest earnings, would provide sufficient monies to 
repay the $102.6 million equity contribution by the 'Equity 
Investors. The $33 million difference between the $388.1 
million lump-sum payment to Muni and the $355.1 
million that Muni would deposit in escrow accounts 
results in the net one-time revenue gain to Muni. As 
stated previously, the actual one-time revenue benefit to 
Muni may be more or less than $33 million, depending 
upon interest rates on the closing date of the transaction. 
The monies in escrow would fund the 27 annual sublease 
payments and the purchase option to be made by Muni to 
the Trust (see Comment No. 15). 

Ms. Harrington advises that the equity portion would be 
invested in Refcos or other U.S. government full faith and 
credit-backed obligations. Ms. Harrington advises that 



Board of Supervisors 
Budget Analyst 

42 



VIemo to Finance Committee 

\pril 10, 2002 Finance Committee Meeting 



Refcos are securities issued by the Federal Resolution 
Trust Corporation. The loan contribution would be placed 
with a Debt Payment Undertaker, Premier International 
Funding Co., under a payment agreement, guaranteed by 
Financial Security Assurance (FSA). 

The equity escrow deposit and its related interest 
earnings, combined with the loan portion escrow deposit, 
would fund the sublease payments that Muni would be 
required to make to the Trust established by the Equity 
Investors, over the 25 to 27-year term (depending upon 
the age of the vehicle being leased) of the sublease. Thus, 
the payment obligations over the life of the sublease 
would be "economically defeased." 1 (See Comment No. 
7(e). Ms. Harrington advises that Muni's external 
auditors have advised Muni that the annual sublease 
payments would not have to be appropriated through 
Muni's annual operating budget. 

The Equity Investors could then depreciate the assets for 
Federal income tax purposes and thus defer payment of 
Federal income taxes. The Equity Investors would also be 
able to defer payment of Federal income taxes by 
deducting the interest expense associated with the loan 
portion of the lump-sum payment to Muni as well as 
transaction-related expenses. Ms. Harrington advises that 
the total estimated tax benefits to the Equity Investors 
has not been disclosed to Muni but that an 8 percent rate 
of return is the benchmark rate for this type of 
transaction. Based on the amount of the $388.1 million 
lump-sum payment to Muni and an 8 percent rate of 
return, the Equity Investors would realize approximately 
$31 million in tax benefits. 

Since "tax ownership" of the up to 118 Breda LRVs, but 
not actual ownership, would be transferred to the Equity 
Investors, Muni would be required to maintain and repair 



Defease- to place the proceeds from the lump sum payment in an irrevocable trust and invest it in U.S. Treasury 
iCUrities or U.S. Agency securities backed by the full faith and credit of the U.S. government. The proceeds 
vested, and the related interest earnings, would fund the required sublease payments and the purchase option. 
hus, the City's payment obligation would be "economically defeased." It would not, however, be legally defeased 
;cause the City would remain responsible for making the sublease payments over the life of the sublease. 

Board of Supervisors 
Budget Analyst 

A3 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 

the subject vehicles. Attachment IV describes such 
maintenance and repair obligations in detail. 
Attachments III and IV, provided by Muni, also include 
additional detail regarding the proposed transaction. 

In response to the request of the Budget Analyst, the 
following documents were submitted by Muni and are 
included as Attachments to the Budget Analyst report: 

Attachment I- Muni's Estimated Transaction Expenses 

Attachment II- Muni's Estimated "Broken Deal Costs" 

Attachment III- Memo from Muni to the Finance 

Committee providing an overview of the proposed 

transaction 

Attachment IV- Memo from Muni to the Finance 

Committee providing a detailed explanation of the 

transaction 

Attachment V- Memo from Muni to the Finance 

Committee regarding Muni's proposed uses of the 

anticipated one-time revenue 

Attachment VI- Attachment from Muni showing the 

termination value payable by Muni to Strip Surety Policy 

Provider(s) if the proposed transaction terminates at any 

point in time over the life of the transaction 

Attachment VII- Table from Muni showing other transit 

jurisdictions that have completed transactions similar to 

the one proposed 

Attachment VIII- Memo from Muni to the Finance 

Committee detailing the bid processes used to select the 

Equity Investors and the Lender/Surety Provider and 

Payment Undertaker 

Attachment IX- Letters from the Federal Transit 

Administration (FTA) to Muni approving the proposed 

transaction 

Comments: 1. Ms. Harrington advises that the City, rather than 

Muni, would be the signatory to the proposed transaction. 
However, she further advises that Muni intends to bear 
the financial risks (see Comment No. 7) of the 
transaction, barring catastrophic events since Muni would 
receive the financial benefits of the transaction (the one- 
time revenue). Ms. Harrington explains that Strip Surety 
Policy is similar to "gap" insurance coverage and it 



Board of Supervisors 
Budget Analyst 

44 



VIemo to Finance Committee 

\pril 10, 2002 Finance Committee Meeting 



protects the Equity Investors should the transaction 
terminate early and the funds in escrow are insufficient to 
repay the Equity Investors the amount they are owed. Ms. 
Harrington further explains that if a Strip Surety Policy 
provider is required to repay the Equity Investors, the 
Strip Surety Policy provider could then seek 
reimbursement from the City through a legal claim 
against the City. 

2. Ms. Harrington advises that while the original intent of 
the proposed transaction was to provide funds for safety 
and security-related capital projects, Muni now 
anticipates that up to approximately $15.9 million of the 
anticipated $33 million in one-time revenue may be used 
to cover anticipated shortfalls and mandatory expenditure 
increases in Muni's FY 2001-2002 current operating 
budget and the FY 2002-2003 operating budget. As stated 
on page 2 of Attachment V provided by Muni, Muni 
anticipates a revenue shortfall of approximately $17 
million in FY 2001-2002. In FY 2002-2003, Muni 
anticipates a revenue shortfall of approximately $23.5 
million as well as mandated expenditure increases of 
approximately $15.2 million, resulting in an anticipated 
budget gap of approximately $38.7 million. Attachment V 
explains how Muni anticipates using approximately $5 
million of the proposed one-time revenue of $33 million to 
balance its FY 2001-2002 budget and approximately $10.9 
million of the proposed one-time revenue of $33 million to 
balance its FY 2002-2003 budget. Ms. Harrington advises 
that the remaining approximately $17.1 million ($33 
million less $5 million less $10.9 million) (or more if the 
projected budget shortfalls are less than anticipated) 
would be available to fund capital projects. 

Ms. Harrington further advises that using a portion of the 
revenues from the proposed transaction would be 
consistent with the November 1999 Proposition E 
requirement that Muni seek alternative revenues to 
alleviate its reliance on the General Fund. Ms. 
Harrington advises that if the current recession is longer 
or more severe than anticipated, Muni would implement 
additional budgetary reduction measures in FY 2002-2003 



Board of Supervisors 
Budget Analyst 

45 



Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



or beyond. Ms. Harrington advises that Muni is currently 
developing such measures. 

3. Ms. Harrington advises that the proposed transaction 
is highly sensitive to changes in interest rates for the 
types of securities in which the lump sum payment would 
be invested in either U.S. Treasury securities or U.S. 
Agency securities. Ms. Harrington further advises that 
Muni currently estimates that the one-time revenue will 
be $33 million. However, Ms. Harrington further advises 
that the actual one-time revenue will depend upon 
interest rates when the transaction closes (or is finalized). 
Ms. Harrington advises that Muni anticipates that this 
will occur by April 12, if this resolution is approved by the 
Board of Supervisors. Ms. Harrington explains that the 
estimate of $33 million assumes an interest rate of 5.80 
percent for the equity portion of the lump-sum payment 
that is placed in escrow. 

Mr. Murphy McCalley of McCalley Consulting, a financial 
advisor to Muni, explains that the relationship between 
changes in interest rates and changes in the one-time 
revenue which Muni would receive is that a 100 basis 
point 2 change in interest rates would have a 400 basis 
point impact to the one-time benefit in the same direction. 
This means, for example, that if the interest rates 
decrease 10 basis points or 0.10 percent from the assumed 
5.80 percent to 5.70 percent, the one-time revenue would 
be 40 basis points or 0.40 percent less than the 
approximately $33 million if rates were 5.80 percent. This 
would mean that the one-time revenue would be $132,000 
less than if the rates were 5.80 percent on the closing date 
rather than 5.70 percent. Likewise, if the rates are higher 
than 5.80 percent, Muni would receive more than the 
estimated $33 million. The interest rate in effect on the 
date of the closing would determine the amount of the 
one-time revenue that Muni receives. Until the closing 
date, the exact amount of one-time revenue that Muni 
would receive will not be known. The resolution states 
that the proposed transaction "shall generate a net 
present value benefit to the City of not less than 6 
percent." Ms. Harrington advises that Muni's 



2 Basis point- the smallest measure used in quoting yields on bonds and notes. One basis point is 0.01% of yie 
Thus, 100 basis poims is 1%. 

Board of Supervisors 
Budget Analyst 

46 



lemo to Finance Committee 

pril 10, 2002 Finance Committee Meeting 



estimate of $33 million in one-time revenue is based upon 
an assumption of a net present value benefit of 
approximately 8.5% percent of the appraised value of up 
to 118 Breda LRVs of $388.1 million. 

4. Ms. Monique Moyer of the Mayor's Office of Public 
Finance advises that she supports the proposed 
transaction as a way for Muni to raise a significant 
amount of cash by leveraging an asset that it already 
owns. She further notes that while the length of the 
transaction is quite long (the sublease term is 25 to 27 
years, depending on the estimated useful life of a given 
vehicle), she believes it is acceptable because Muni is a 
perpetual entity. She advises that she believes the 
primary risk is of early termination (see Comment No. 
7(a)(1) and Attachment IV). She further advises that the 
proposed transaction will constrain the Board of 
Supervisors ability to dispose of the Breda LRVs prior to 
the end of the sublease term. 

Ms. Moyer further advises that while she believes the 
transaction has much more risk than the City is 
accustomed to taking, the Muni finance and legal team 
has carefully analyzed those risks and Muni is satisfied 
that such risks are reasonable. Ms. Moyer further advises 
that she has discussed the risks and proposed mitigation 
of those risks with Muni's staff and advisors as well as 
with the Controller. However, she advises that she has 
not reviewed the documentation for the transaction and 
thus, there could be other terms of which she is not 
aware. She further states that if proposed transaction 
terminates early, the cost to the City would be enormous. 
However, she adds, the likelihood of the transaction 
terminating early is extraordinarily remote and some of 
the circumstances under which it could terminate are 
within Muni's control. Some are not, however, she adds. 

5. Ms. Harrington advises that if the Board of Supervisors 
or Muni wanted to replace the Breda LRVs before the end 
of the term of proposed transaction, it could do so but it 
would then have to maintain and store the leveraged 



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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



LRVs until the purchase option (see Comment No. 15) is 
exercised at the end of the sublease term. Ms. Harrington 
notes, though, that the fleet could be sub-subleased to 
another U.S. transit system before the end of the 
proposed sublease. Ms. Harrington advises that Muni 
would require the sub-subleasing transit agency to 
maintain and insure any vehicles, but Muni would retain 
the legal sublease obligations regarding maintenance and 
insurance in the event the sub-sublessee failed to meet 
those requirements. Ms. Harrington advises that the 
Santa Clara Valley Transit Authority is in the process of 
negotiating a sub-sublease of its obsolete equipment to 
another transit agency in order to avoid terminating its 
tax advantage lease. 

Ms. Harrington further advises that aside from the 
Boeing fleet of light rail vehicles that were recently 
retired, Muni has historically retained vehicles for 30 
years and therefore, the likelihood of replacing the LRVs 
before the end of the sublease term would be remote. Ms. 
Harrington explains that Muni experienced significant 
reliability problems with the Boeing fleet and such 
problems resulted in the retirement of the fleet after 20 
rather than 30 years. Ms. Harrington advises that some of 
the LRVs in the Boeing fleet were sold and some were 
permanently retired. Ms. Harrington adds that any LRVs 
no longer useful to Muni go through the City's process for 
disposal of surplus property. Ms. Harrington adds that 
Muni's has no information that would lead it to believe 
that the Breda LRVs would last less than 30 years. 

With regard to the possibility of replacement of the LRVs 
due to obsolescence, Ms. Harrington advises that although 
parts of Breda LRVs may become obsolete, the LRVs 
themselves will not. Ms. Harrington advises that it is 
standard practice in the industry to rebuild and continue 
to use the LRVs. Ms. Harrington adds that the proposed 
transaction would not prohibit Muni from rebuilding and 
continuing to use the LRVs in the future. 

6. Ms. Harrington advises that the degree of total 
potential risk to the City would vary depending on upon 
the circumstance. She advises that the worst case 



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vlemo to Finance Committee 

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scenario would be an early termination due to a default by 
Muni. If that occurred, Muni (and thus the City) would be 
liable to pay the termination value, as explained below. 
Ms. Harrington advises that most of the termination 
value would be paid from the monies held in the debt 
payment and equity escrow accounts. Ms. Harrington 
explains that should sufficient funds not be available from 
those sources, the strip surety policies from FSA and/or 
ACE Guaranty Re, Inc. would pay the difference. 
However, those insurers could then seek recourse from 
Muni. With regard to the City's potential financial risks, 
Mr. Robert Bryan of the City Attorney's Office advises 
that based upon the structure of the proposed transaction, 
the City could not be forced to use General Fund monies 
to meet any such obligation. 

As shown in Attachment VI, the termination value could 
be a maximum of approximately $125.7 million in 
December 2014. In December 2003, it would be 
approximately $71.1 million; in December 2024, it would 
be approximately $49.8 million. Attachment VI, provided 
by Muni, shows the scheduled termination values over the 
life of the proposed transaction. 

7. Muni has identified the following financial risks 
associated with the proposed transaction as well as ways 
to mitigate such risks. Attachment IV addresses these 
risks, as well. 

(a) Early Termination Risk - 

This is the risk that the transaction would be 
terminated before the Purchase Option date of 
January 2028. As a result, Muni would be responsible 
for "termination payments" as well as the remaining 
sublease payments (the funds for which would be in 
the escrow accounts). As explained in Attachment IV, 
the most likely reasons for an early termination would 
be a default by Muni, obsolescence of the LRVs, or a 
catastrophic event which destroys the LRVs. 

As stated previously, the source of funds to pay for an 
early termination would be the funds held in escrow, 
assuming such funds have earned sufficient interest to 



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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



cover such payments. If the required termination 
payment exceeds the investment principal plus 
interest earned to date, an insurance policy (Financial 
Security Assurance) would cover the difference. 
However, Ms. Harrington advises that Financial 
Security Assurance would have the right to then seek 
reimbursement from Muni. 

Ms. Harrington advises that the most likely reasons 
for an early termination would be default by the City, 
obsolescence of the Breda vehicles, or destruction of a 
Breda vehicle, or requisition by a third party. Ms. 
Harrington advises that an example of requisition by a 
third party would be the unlikely possibility that some 
other governmental agency (State or Federal) might 
requisition the vehicles due to some type of emergency. 

Proposed Mitigation of Early Termination Risk - 
According to Ms. Harrington, the early termination 
risks are mitigated by the fact that a portion of the 
funds to pay for the remaining sublease payments 
would be held in escrow and invested in low-risk direct 
obligations of the U.S. Government or investment 
securities secured by direct obligations of the U.S. 
government. 

As stated previously, FSA and/or ACE Guaranty Re, 
Inc. Strip Surety Policies would be available if the 
defeased funds were insufficient. FSA and/or Ace 
Guaranty Re, Inc. could then seek reimbursement 
from Muni. 

Further, Muni has obtained third-party insurance on 
the Breda fleet which would provide funds for an early 
termination due to reasons other than an earthquake, 
war, or terrorism. Ms. Harrington advises that Muni 
has committed to obtaining $200 million in insurance 
coverage with a $40 million deductible and may 
purchase additional insurance. Ms. Harrington advises 
that the $40 million value of the deductible amount is 
the estimated value of the 12 LRVs that would be held 
back from the transaction. 



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/lemo to Finance Committee 

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Ms. Harrington advises that the early termination risk 
is further mitigated by the fact that Muni can control 
many of the actions that could trigger a default (and 
thus an early termination), such as failure to properly 
maintain or insure the LRVs, failure to make sublease 
payments which is unlikely because funds held in the 
two escrow accounts are available for this purpose. Ms. 
Harrington notes that to date, none of the more than 
30 similar transactions nationwide involving transit 
agencies have terminated early for any reason. 
Attachment VII, provided by Muni, lists other 
jurisdictions that have conducted leveraged lease- 
leaseback transactions. 

(b) Breach of Contract Risk - This is the risk that the 
Equity Investors would not receive their Federal tax 
benefits related to the proposed transaction as a result 
of an action, or lack of action, by the City as required 
by the proposed transaction agreements. (While such 
actions or non-actions would be carried out by Muni, 
this section refers to "the City" because the City is the 
signatory to the proposed transaction.) Ms. Harrington 
advises that an example of how the City could breach 
the contract would be if the City misrepresents 
information about the Breda LRVs to the Equity 
Investors in the preparation for the transaction. Ms. 
Harrington advises that as long as the City and Muni 
do what they have agreed to do under the transaction's 
documents, such a risk would be minimized. Ms. 
Harrington advises that the Equity Investors would 
bear the risk that Federal tax law may change and 
they would not, as a result, be able to receive the tax 
benefit associated with depreciation of assets. 

Proposed Mitigation of Breach of Contract Risk - 
Muni's Finance section will monitor whether the City 
is complying with such provisions. 

(c) Tax Risk - Mr. McCalley advises that there are four 
components to tax risk, one of which is borne by the 
Equity Investors and three of which are borne by the 
City. Mr. McCalley advises that, as explained above, 
the Equity Investors would bear the risk that Federal 



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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



tax laws may change and they would no longer be able 
to reap the tax benefits of depreciating the transferred 
assets (the Breda LRVs). According to Mr. McCalley, 
the only circumstance under which the City could be 
held responsible for this would be if the tax benefits 
were lost because the City misrepresented information 
about the Breda vehicles. 

Mr. McCalley advises, though, that the City would be 
responsible for three other tax risks. The proposed 
resolution would indemnify the Equity Investors for 
such risks. These include the risk that Sales Tax, 
Property Tax, or Withholding Tax could be imposed on 
the transaction. Sales tax risk refers to the possibility 
that transfer of LRVs to the Trust would be subject to 
State Sales Tax. Property Tax risk refers to the 
possibility the Assessor would impose Property Taxes 
on the transfer of the LRVs to the Trust. Withholding 
Tax risk refers to the possibility that a change in tax 
law would subject the proposed transaction to 
Withholding Tax, an event that Muni officials believe 
is highly unlikely. 

Proposed Mitigation of Tax Risk - Sales Tax risk is 
mitigated by State legislation approved in October of 
2001 that exempts lease-leaseback transactions 
executed before 2004 from State Sales Tax. Ms. 
Harrington advises that even if the exemption is not 
extended beyond 2004, the proposed transaction would 
not be affected. Property Tax risk is mitigated by a 
commitment Muni has received from the current 
Assessor, stating that she will not impose Property 
Taxes on the transaction. However, as explained in 
Attachment IV, this does not necessarily eliminate the 
risk that future Assessors may take a different 
position. Lastly, Muni believes that a change in 
Federal tax law that would result in making the 
transaction subject to Withholding Taxes is unlikely 
because such a change would, in effect, be retroactive 
and would adversely impact trillions of dollars of such 
transactions. 



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Iemo to Finance Committee 

.pril 10, 2002 Finance Committee Meeting 



(d) Risk of Bankruptcy of either Trust or of Equity 
Investors - According to Mr. McCalley, this is the risk 
that the Equity Investors go bankrupt and the 
bankruptcy judge determines that the escrow accounts, 
holding the funds for the sublease payments, are part 
of bankruptcy assets. 

Proposed Mitigation of Risk of Bankruptcy of Trust or 
Equity Investors - Mr. McCalley advises that this risk is 
mitigated by the use of a Special Purpose Trust (the 
"Trust") that is "bankruptcy-remote." He advises that 
bankruptcy attorneys have advised that this means the 
Trust could not be included in the bankruptcy assets. 

(e) Credit Risk - The City's obligations to make the 
sublease payments would be economically defeased on 
the closing date of the transaction through the City's 
deposit in escrow of the loan and equity portions of the 
lump-sum payment paid to the Trust. However, the 
City would still be legally obligated to make the 
sublease payments. The risk, then, is the possibility 
that the sublease payments may not be made. 

Proposed Mitigation of Credit Risk - The risk associated 
with the Debt Payment Undertaker (the loan portion of 
the lump-sum payment) would be mitigated in two 
ways: through insurance provided by an Aaa/AAA rated 
insurer and through the ability to replace the Debt 
Payment Undertaker or the insurer if the insurer's 
credit rating is downgraded. The risk associated with 
the equity investment portion would be mitigated by 
investing in low-risk, fixed-rate securities backed by 
the full faith and credit of the U.S. government. 

(f) Operational Risks - Under the proposed transaction, 
Muni will be responsible for maintaining and repairing 
the Breda LRVs during the term of the sublease. If any 
LRV must be permanently removed from service, Muni 
would be responsible for compensating the Equity 
Investors for the LRV and corresponding loss of tax 
depreciation benefits. 



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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Proposed Mitigation of Operational Risks - Muni would 
"hold back" 12 vehicles from the proposed transaction, 
for the purpose of substituting one of the 12 if one of 
the vehicles involved in the proposed transaction is 
permanently removed from service. If Muni were 
unable to provide a "holdback" vehicle as a 
replacement, insurance proceeds would compensate the 
Equity Investors instead. Ms. Harrington notes that 
Muni staff are aware of only one instance in the last 25 
years when a Muni light rail vehicle was destroyed due 
to an accident. 

8. Ms. Harrington advises that the Equity Investors, as 
well as the loan and guaranty surety providers, were 
selected through a competitive bid process. She advises 
that the firms offering the highest economic return to 
Muni were selected as the Equity Investors. Ms. 
Harrington further advises that the loan and guaranty 
surety providers were selected based on the lowest bid. An 
explanation of the bid process and a summary of the bids 
received is included in Attachment VIII, provided by 
Muni. Ms. Harrington advises that the group of investors 
consisting of CIBC Capital Corporation, Comerica 
Leasing Corporation, Wells Fargo Bank Minnesota, N.A. 
Australia and New Zealand Banking Group Limited 
submitted a bid that would provide the highest economic 
return to Muni, resulting in an estimated $33 million one- 
time revenue gain for Muni. Ms. Harrington advises that 
bids were submitted based on the percentage of vehicle 
market value that the Equity Investors would pay Muni, 
as described in Attachment VIII. Ms. Harrington notes 
that the economic benefit data included in Attachment 
VIII was based on the May 2000 estimate of the number 
of LRVs included in the proposed transaction. That 
number has since increased and therefore, the current 
estimate of the net economic benefit is higher than that 
shown in Attachment VIII. The next highest bid was 
submitted by Fleet Bank. 

Ms. Harrington notes that since 1995, CIBC has been 
involved in more than 30 transactions similar to the 
proposed transaction and valued at more than $5 billion 
involving U.S. transit agencies. Ms. Harrington further 



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Budget Analyst 

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'Iemo to Finance Committee 

ipril 10, 2002 Finance Committee Meeting 



advises that Wells Fargo and Comerica, also have 
experience as Equity Investors in leveraged lease- 
leasebacks. Specifically, Ms. Harrington advises that 
Wells Fargo is an Equity Investor in such transactions 
with Los Angeles County MTA and Caltrans, as well as in 
Seattle. Ms. Harrington advises that Comerica is an 
Equity Investor in Los Angeles County MTA as well as 
with other transit agencies in Dallas and Seattle. Ms. 
Harrington also advises that FSA has served as surety 
provider for 30 such transaction and as Lender in more 
than 10 such transactions. 

9. Assistant City Risk Manager Nancy Johnston-Bellard 
advises that she has reviewed all documents related to 
the proposed transaction. Based upon this review, she 
advises that she believes the City's risk related to the 
proposed transaction is well-managed. Ms. Johnston- 
Bellard advises that "well managed" means the City has 
taken appropriate action prior to entering into the 
proposed transaction to mitigate the risk that the City 
could be held responsible for the liability of one of the 
other parties and thus is responsible only for its own 
actions. 

10. Ms. Harrington advises that Muni anticipates 
carrying out another leveraged lease-leaseback 
transaction that would close by the end of the first 
quarter of calendar year 2003. Ms. Harrington advises 
that transaction would involve an additional 21 LRVs in 
the Muni Breda LRV fleet. Muni estimates that such a 
future transaction would result in $5.9 million in one-time 
revenue to Mum, based on the assumptions surrounding 
the proposed current transaction. Such a subsequent 
transaction would also require Board of Supervisors 
approval at that time. 

11. The proposed resolution would approve the key 
agreements related to the transaction (Participation 
Agreements, Head Lease Agreements, Head Lease 
Supplements, Sublease Agreements, Sublease 
Supplements, Payment Agreements, Equity Collateral 
Security Agreement, Custody Agreement, Support and 
Access Agreements, Agreements for Assignment on 



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Budget Analyst 

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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



Default, Tax Indemnification Agreements, Insurance and 
Indemnity Agreements) in "substantially the form 
presented to the Board." With regard to each of these 
documents, however, the proposed resolution further 
authorizes the Mayor or his designee, who, according to 
Ms. Harrington, would be the Director of the Municipal 
Transportation Agency (MTA) who is the same person as 
the General Manager of Muni, to execute such 
agreements and "make such modifications, changes, or 
additions to said documents as may be necessary or 
advisable provided that such modification, change, or 
addition does not extend the term of the sublease beyond 
thirty (30) years or provide for a net present value benefit 
to the City of less than 6% of the appraised value of the 
Rail Cars." Ms. Michelle Sexton of the City Attorney's 
Office advises that such language is similar to language 
typically included in legislation to approve bond 
issuances. 

However, the Budget Analyst notes that the subject 
transaction is more complex, less routine, and exposes the 
City to more risk than a bond issuance. Therefore, the 
Budget Analyst recommends that such language be 
amended to further state that such changes, additions or 
modifications made by the Mayor or the Mayor's designee 
should not substantially alter the agreements as approved 
by the Board of Supervisors and that any substantive 
changes would require Board of Supervisors approval. 

The proposed resolution also authorizes and directs "the 

proper officers of the City to do any and all things and 

take any and all actions and execute any and all 
certificates, agreements and other documents, including 
but not limited to those documents described in the 
Transaction Summary or the sublease and other 
documents herein approved...." The Budget Analyst 
recommends amending such language to state that such 
actions should not substantially alter the substance of the 
transaction as approved by the Board of Supervisors. 

12. The proposed resolution states that the City "will 
waive its right to a jury trial in any suit, action, or 
proceeding arising as a result of a breach by the City of a 



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ipril 10, 2002 Finance Committee Meeting 



monetary obligation under any of the documents to which 
the City is a party and the Transaction." Ms. Sexton, of 
the City Attorney's Office, states that it is highly unusual 
for the City to waive its right to a jury trial. She notes, 
however, that such a waiver in this instance is limited 
solely to a "breach by the City of a monetary obligation 
under any of the documents to which the City is a party 
under the Transactions." She advises that Muni requested 
that such language be included in the proposed resolution 
because no other similar transactions (in other 
governmental jurisdictions) have been approved without 
such language. She advises that the concern of the Equity 
Investors is that the proposed transaction is too 
complicated for review by a jury. She further advises that 
the most likely breach by the City that would be governed 
by this provision would be the City's failure to make the 
required sublease payments to the Trust. However, she 
notes that it is highly unlikely the City would fail to make 
such payments because the City's obligation will have 
been economically defeased and thus funds held in escrow 
would be available for the regularly scheduled payments. 

13. The proposed resolution includes a provision to waive 
the requirements of Sections 12B and 12C, the non- 
discrimination provisions of the San Francisco 
Administrative Code for any agreement authorized by the 
proposed resolution to which the City and any of the 
following are parties: (a) Lender (b) Strip Surety Provider 
(c) Equity Investor and (d) Debt Payment Undertaker (see 
Attachment III). Ms. Harrington advises that such 
waivers are necessary because the Equity Investors CIBC, 
Comerica, and ANZ are not in compliance with such 
nondiscrimination provisions. In addition, Strip Surety 
Policy Providers ACE Guaranty Re, Inc. and FSA are also 
not in compliance. Nor are Debt Payment Undertaker 
Premier International Funding Co. or the Lender FSA 
Global Funding Limited in compliance. Ms. Harrington 
advises that Wells Fargo and State Street Bank are in 
compliance with Section 12B. 

14. Ms. Harrington advises that MTA Board of Directors 
approved the proposed transaction on November 20, 2001 
through Resolution No. 01-115. Ms. Harrington advises 



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Memo to Finance Committee 

April 10, 2002 Finance Committee Meeting 



the Federal Transit Administration (FTA) approved the 
proposed transaction in January of 2002. Ms. Harrington 
advises that FTA approval is required because the light 
rail vehicles involved in the transaction were funded 
through a combination of FTA grants, State rail bond 
funds, and Proposition B capital grant funds. Ms. 
Harrington further advises, as stated on page 7 in 
Attachment IV, that the "FTA strongly supports the 
efforts of transit agencies to undertake 'innovative 
financing' initiatives" such as the proposed transaction. 
Attachment IX, provided by Muni, includes two letters 
from the FTA in support of the proposed transaction. 

15. Ms. Harrington notes that Muni has the option to 
purchase the 118 LRVs at the end of the sublease term 
(purchase option) in approximately 27 years for 
$1,015,275,352. Ms. Harrington explains that at the start 
of the transaction, Muni would be defeasing the future 
sublease payments and the purchase option amounts by 
placing the $355.1 million into escrow. Ms. Harrington 
advises that the purchase option includes final loan 
payments on the loan portion as well as equity 
investment repayment, with interest over 27 years. Ms. 
Harrington advises that the funds placed in escrow will 
grow to the amount required to defease these obligations. 
Ms. Harrington advises that the purchase option will be 
automatically exercised unless Muni acts to choose not to 
exercise it. 

16. Due to the uncertainty regarding the specific amount 
of the one-time revenue Muni will collect (currently 
estimated at $33 million) as a result of the proposed 
leveraged lease-leaseback (because of the potential for 
fluctuations in interest rates), and the complex nature of 
the transaction, the Budget Analyst recommends that the 
Board of Supervisors amend the proposed resolution to 
require Muni to report back to the Board of Supervisors 
after Muni has completed the proposed transaction. Such 
a report should include: (a) specific information on the 
actual amount of the one-time revenue received and how 
Muni plans to use such revenue and (b) information on 
any changes in the transaction since its approval by the 
Board of Supervisors. 



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17. Attachment VII, provided by Muni, lists other 
jurisdictions that have completed leveraged lease- 
leaseback transactions similar to the one proposed by 
Muni. Ms. Harrington notes that such California 
jurisdictions include: (a) the Southern California Regional 
Rail Authority (b) the Peninsula Corridor Joint Powers 
Board (c) Bay Area Rapid